New rare earth metal plants to intensify industry competition

Asian Metal: Hello, Mr. Wu! Thank you for accepting this interview from Asian Metal. Could you please introduce your company and your main business briefly?

Mr. Wu: Established in April of 2018, Baotou Jiqian Rare Earth New Materials Co., Ltd. owns a total investment of RMB112 million (USD16.5 million) with two phases of construction. We started the infrastructure construction since May of 2019 and already finished the pilot production of phase one by this June. Our main business is the production and sales of rare earth metals, rare earth alloys and hydrogen storage materials.

Asian Metal: Thank you for your introduction. Would you please give us a brief introduction of your career?

Mr. Wu: I have engaged in rare earth industry for more than twenty years. Before 2001, I engaged in research work of NdFeB permanent magnet and the production of rare earth metals, such as dysprosium metal, terbium metal, yttrium metal and samarium metal. After then, I started to build my own company named Baotou Shifa Rare Earth Co., Ltd. which mainly deals with the comprehensive recycling of NdFeB magnet waste. In December of 2004, I built Baotou Yikun Metallurgy Co., Ltd. and engaged in the production and sales of rare earth oxide and metal products. In April of 2018, I co-founded Baotou Jiqian Rare Earth New Materials Co., Ltd. with several other shareholders, which is mainly engaged in the production and sales of rare earth metals and alloys.

Asian Metal: Chinese PrNd oxide and PrNd mischmetal prices increased continuously during from mid-April to late August, and then the prices moved down. What do you think are main factors thatpull down the prices? How would PrNd mischmetal price go in Q4 of 2020?

Mr. Wu: Chinese PrNd mischmetal prices increased a lot before late August and the rough NdFeB magnet plants witnessed losses, thus consumers purchased cautiously since this September. I believe thephenomenon that PrNd mischmetal prices dropped is the normal. Current PrNd mischmetal supply keeps tight and most NdFeB magnet plants have sufficient orders. Besides, most medium and small sized NdFeB magnet plants hold few stocks now, so consumers still has rigid demand before the mid-October. Therefore, I forecast that Chinese PrNd mischmetal prices would rise a bit in October and thenstabilize for a period of time. By the end of this year, it is likely for the price to drop due to the tight cash flow of manufacturers.

Asian Metal: Throughout the past three quarters of 2020, Chinese cerium oxide and cerium metal prices continued dropping but the decrease of cerium oxide price intensified in August and September, why? What's the impact on cerium metal market? What do you think of cerium metal market in Q4 of 2020?

Mr. Wu: On the one hand, the major supplier decreased cerium oxide quotation in August, which directly pushed down cerium oxide prices in the spot market. On the other hand, Chinese PrNd oxide, dysprosium oxide and terbium oxide prices increased continuously over the past several months, which resulted in dropping prices of cerium oxide considering the balance of suppliers' production cost. As a consequence, Chinese cerium metal prices moved down over the past month. Given that Chinese cerium metal producers earn thin profits now and Chinese cerium oxide prices already stayed at a historical low level, I forecast that it is likely for Chinese cerium metal prices would softly stand at current prices and the market would keep softening in the coming quarter of 2020.

Asian Metal: As far as I know, your company already released the industrialization plan for 3,000tpy of rare earth metals and alloys. How is it going now? Could you please introduce your company's current rare earth metal production capacity construction, production status and future development plan?

Mr. Wu: We already finished the phase one construction and officially put into production. For phase two, we plan to start the construction in next April and would finish by October of 2021. My companyalready equipped 21 molten salt electrolysis tanks, including 15 for PrNd mischmetal production and six for cerium metal production. Thus we can produce around 80t of PrNd mischmetal and 30t of cerium metal per month. Besides, there are still six molten salt electrolysis tanks that are under equipping now. After fully operation late next year, we would own annual capacities of 2,500t for rare earth metals & alloys and 500t of hydrogen storage materials.

Asian Metal: Some new smelters in Baotou city already resumed production this year, will these new capacities enhance competition among suppliers? As a new built rare earth metal plant, what measures would you take to meet the industry challenges and promote the development of your company?

Mr. Wu: There is no doubt that new built rare earth metal plants would intensify the competition among suppliers. In order to cope with fierce competition in the near future, we would promote research work to make differentiated products and avoid homogeneous competition. Besides, we would improve products' quality, performance and service for clients, so that we can maintain competitive advantages.

Asian Metal: We also noticed that North China companies already built an OEM system in Inner Mongolia and Gansu provinces, which entrusts smelters to produce PrNd mischmetal for them. Would you like to join in the system?

Mr. Wu: We would consider participating in the system. As we already built the strategic partnership withrelated companies, we may attend the bid of producing PrNd mischmetal for these companies on basis of ensuring the product quality. However, we have our own plan to seek self-innovation and self-development at the same time. We would strive to develop our company into an innovative deep-processing rare earth metal enterprise and further enhance the competitiveness of Baotou rare earth metals and alloys in the domestic market.

Asian Metal: Besides PrNd mischmetal, cerium metal and ferrogadolinium, what's your plan on hydrogen storage materials production line with an annual production capacity of 500t? What do you think of the future for hydrogen storage materials?

Mr. Wu: As we are new built enterprise, we would utilize new production equipment, new process, new technology and adopt innovative managing concept to make our product better. We are going to establish a new production line with 500tpy of hydrogen storage materials next year, which would put into production by the end of 2021. Not only hydrogen storage material can be used as thecathode material of lithium battery, but also it can be made for energy storage material, which used as the storage vehicle of hydrogen gas. As China is speeding up the layout of the hydrogen industry and increasing investment, I believe that hydrogen storage material will be used widely in the field of the hydrogen application.

Asian Metal: As a upstream supplier for NdFeB magnet industry, what's your forecast of China NdFeB magnet market in Q4 of 2020? Will the COVID-19 have the impact on demand of rare earth metal and magnet in 2021?

Mr. Wu: I forecast that Chinese NdFeB magnet industry would operate steadily in Q4 of 2020. As rare earth permanent magnet materials are mainly used in the electronic motor and other manufacturing industries, and the share for the civilian area is small, so I think the COVID-19 would not make too much bad effect on downstream demand of rare earth metal and magnet. As the situation of epidemicprevention gets better, I believe that the demand for Chinese NdFeB magnet would increase by 5-8%YOY in 2021.

Asian Metal: At last, would you like to share us some feelings on the enterprise management and administration?

Mr. Wu: We strive to the concept of "Delicacy Management & Strict Quality Control" for the production management. In terms of administration, we insist on people-oriented principle, aiming to gradually form a development pattern with professors and doctors' research teams as the engine, technical talents as the backbone and management talents as the cornerstone.

Asian Metal: Thanks for your sharing and your support, Mr. Wu! Wish you every success in your business!

Mr. Wu: Thanks for your interview, I wish Asian Metal better and better!