Chinese tantalum and niobium concentrate prices to increase in Q3

Asian metal: First of all, thank you very much for accepting the interview. Please give us a brief introduction about the currentstatus of your company.

Tu: Last year, affected by the outbreak of COVID-19, the downstream related industries of our company's two main products, tantalum-niobium and lithium-mica, suffered a sharp drop in the price of tantalum ore and lithium carbonate, which was unprecedented for many years and seriously disrupted our annual production and operation target. Based on years' understanding of the market, we believe that due to the lack of effective control of the epidemic in foreign countries, the production and demand from the world's major economies will not be able to get out of the dilemma for the time being, and the price of tantalum ore may remain low. Conversely, lithium market also remained at its lowest level in the recent 10 years, but with good control of domestic outbreak, enterprise rapidly returned to work and production, 5G and the rapid popularity of new energy vehicles will immediately drive lithium market. Thus we increased the communication and cooperation with lithium carbonate smelting enterprises and actively increased the production of lithium mica and reserves. As predicted before, the price of lithium salt rose steadily from Q4 of 2020 until the end of Q1 of this year. Our company's reserve of lithium mica concentrate last year was ordered out by all the lithium salt manufacturers. At present, the company's production and operation remain in a good condition, with strong demand and good situation. The production and operation indexes both increased significantly compared with the same period last year. In Q1, the accumulative production of tantalum-niobium concentrate,lithium mica concentrate and feldspar powder increased by 39.7%, 76.5% and 69% respectively YoY. The mining volume increased by 24% and the raw ore processing volume increased by 29.7% YoY. Total industrial output value increased by 34.4%year-on-year; operating revenue increased by 45.6% YoY.

Asian metal: As a senior practitioner of tantalum andniobium industry in China, please introduce your working experience.

Tu: Graduated from Mining Engineering Department of Chongqing University in 1988, majored in Mining Engineering, I started to work in Yichun Ta & Nb Mine Co. in July of the same year. I successively served as technician, assistant worker, section chief, site director, director of production technology section, safety and environmental protection section of the mine, assistant of mine manager for safety and environmental protection, production technology and so on. In 2000, I came to Ningxia Orient Tantalum Industry Co., as the resource development department director, mainly engaged in overseas tantalum-niobium and other solid mineral preliminary feasibility study, development and utilization. In 2008, I came to Jiangxi Tungsten Industry Group as the deputy manager of production technology department, senior engineer, and were engaged in the production technology management work of the group. In December 2020, I was transferred to Yichun Ta & Nb Mine Co. as the general manager. Now I act as the General Manager of Yichun Ta & Nb Mine Co.,Professor-level Senior Engineer, Standing Director of China Nonferrous Metals Association, Specially invited Expert of Jiangxi Nonferrous Metals Industry Chain, Member of Expert Committee of China Nonferrous Metals IndustryTechnology Innovation Strategic Alliance, Jiangxi provincial geological environment, resource reserves review, "three in one" report review, green factories and green mines, energy conservation and comprehensive utilization of resources, strategic emerging industries, high-quality development, cultivation of new drivers and precision support expert advisory group of more than 20 expert database experts.

Asian metal: What is the distribution and consumption pattern of tantalum-niobium resources in China? How about the proportion of Chinese tantalum-niobium ore which accounts for the total consumption volume inChina?

Tu: Generally speaking, tantalum and niobium resources are relatively scarce in China. At present, all domestic tantalum ores come from Yichun, Jiangxi Province. Our company is the only large-scale tantalum andniobium ore producer in China. With the rapid development of the lithium power new energy industry, tantalum ore associated with the rich lithium mica resources around Yichun has been partially produced as a by-product due to its low grade and lack of mining value before. The production volume can reach about 20-30% of our company's annual output. In recent years, the annual consumption of tantalum in China remained at about 2,000t, and the output of our company also remained relatively stable. The total output of tantalum ore in China accounts for 8-10% of the domestic demand.

Asian metal: Compared with foreign mines, what are the advantages and disadvantages of Chinese tantalum and niobium mines?

Tu: The advantages are as follows: the resource is abundant with granite type, and the ore reserves reached about 100 million tons with high comprehensive utilization value. We can produce both tantalum and niobium concentrate and also new energy metal lithium. In addition, tailings can be comprehensively recycled to produce lithium feldspar. The daily processing capacity reaches 7,000 tons, and the mine lift could reach more than 30 years according to the current scale of production. We have mineralization concentrated area, mechanization of acquisition with stable output. The disadvantage is that the grade of Ta2O5 in the raw ore is low, only 1/10000, so the output cannot meet the demand of domestic smelting and processing market.

Asian metal: Recently, the second round of the third batch of central ecological and environmental protection supervision has been officially launched. Will it discourage the production of tantalum and niobiumore in Jiangxi? What new opportunities and challenges will the new environmental protection policy requirements bring to the tantalum-niobium ore production enterprises?

Tu: Environmental supervision in Jiangxi would discourage local tantalum processing and smelting industry to a certain extent, as some small and medium sized mines, processing enterprises may suffer pressure from environmental protection and reduce their outputs. As our company always comply with the rules in accordance with the production and owns all kinds of complete formalities, safety and environmental protection, who is a national green mining enterprise, we usually pay more attention to safety, environmental protection investment. The central ecological and environmental protection supervision has limited impact on our company in fact. Of course, the supervision also puts forward higher requirements to our mine. In recent years, we are committed to the construction of green mine and digital mine, constant improvement of the development concept, practice social responsibility, which awarded the national green mine. In the past three years, the total investment for safety andenvironmental protection reached 18 million yuan, including environmental protection investment of more than 9 million yuan.

Asian metal: What about African and South American tantalum and niobium ore supply in 2020? Since the end of 2020, the African andSouth American tantalum and niobium ore prices continued to rise, do you think the domestic ore prices will follow? What is the price direction in the future?

Tu: As far as I know, the production of tantalum and niobium ore in Central Africa increased to a certain extent in2020 compared with that in 2019. In 2021, part of the ore in Central Africa entered the European and American markets, and a large part of the ore output concentrated in the hands of internationally influential traders as inventories. South American sources of supply and production are also increasing in Brazil, Colombia and Venezuela. It is worth noting that the amount of recovered and enriched tantalum in Australian lithium salts in China's domestic market is also gradually emerging, mainly concentrated in Hebei, Shandong and Jiangxi provinces. The domestic ore price depends on the circulation environment in the upper, middle and lower reaches of the domestic tantalum and niobium market, and the mainstream prices would increase steadily. Tantalum raw material is mainly used in tantalum capacitors, which accounts for about 60% of the total consumption of tantalum powder. From 2019 to 2020, the global tantalum capacitor consumption volume showed a certain degree of decline. With the effective control of the global epidemic and slow economic recovery, the tantalum industry should develop steadily in the future. Due to the over-decline of the price in H2, 2020, the price rebounded so far this year. I believe that the Chinese tantalum and niobium concentrate prices would increase further in Q3.

Asian metal: In 2020, discouraged by COVID-19, Chinese domestic tantalum and niobium market remained quiet. However, with the effective measures taken by the Chinese government to control the epidemic, China fully resumed production in 2021. Do you think the total production and sales of tantalum and niobium in China will rebound significantly compared with last year? Which downstream industries will have better performance?

Tu: China took the lead in bringing COVID-19 under control, with rapid economic recovery and a certain degree of recovery in the downstream tantalum and niobium industries. With the rapid development of tantalum capacitor and cemented carbide industry in China, the proportion of domestic tantalum and niobium industry will gradually share the proportion of international export market. This year, the total production and sales of tantalum and niobium ore in China should pick up compared with last year, and the downstream tantalum capacitors, tantalum targets and tantalum metals should all increase to a certain extent, with an expected growth rate of about 10%.

Asian metal: What are your advantages and disadvantages compared with your peers in domestic market?

Tu: At present, our company is the only large-scale tantalum ore producer in China, which can only be compared with enterprises engaged in importing raw materials. The advantage of our company lies in that our resources are all from our own mines in China and are not affected by changes in geopolitics and laws and regulations of relevant countries. The time period from raw material procurement to finished product processing and delivery for smelting enterprises can be very short with strong timeliness. In extreme cases, it can partially act as the "ballast stone" of domestic tantalum mines. In addition, our company has huge resource reserves, great value of comprehensive utilization, obvious regional advantages, years of management and technology accumulation, coupled with the new energy metal lithium market is hot, the subsequent mine development prospects are predictable. The disadvantages are also obvious, which is that the grade of raw ore remains low and shows a trend of decline year by year, resulting in high production costs. In addition, the raw material and labor costs continue to rise at a growth rate of at least 10%, causing certain pressure on mine operation.

Asian metal: What about your company's future development plan?

Tu: Looking to the future, we focus on "the construction of the domestic leading, comprehensive, circulation and efficientutilization of resources mining companies, to resources, high technology, efficiency of mining company", and actively carry out technological innovation and management innovation. We mean to build a unique tantalumniobium lithium resources comprehensive utilization and respected demonstration enterprise. In addition to producing tantalum and niobium as the main product, the company should meet the development needs of emerging industries such as lithium power new energy, make new exploration of other comprehensive utilization products, make efforts to reprocessing and further processing of products, adhere to the road of circular economy and sustainable development, and seek new development and takeoff of the company. By further improving the production technology and the comprehensive utilization rate, the annual growth rate of tantalum and niobium ore is expected to reach 5%.

Asia Metal: Thank you again for accepting the interview with Asia Metal, and wish the company a prosperous business!