Mengdong Germanium to participate in establishing an orderly and competitive germanium market

Asian Metal: Good day, Mr. Zhang! Thank you very much for accepting the interview. Xilingol Mengdong Germanium Technology Co., Ltd (hereinafter referred to as Mengdong Germanium) is a newly-built company in the germanium industry. Could you please introduce your company so that we can know it better?

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Mr. Zhang: Mengdong Germanium, established in April 2008, is jointly funded by Mengdong Energy Holdings Co., Ltd and Xilinhot Tianxiang Consulting Service Co., Ltd, and the investment amount is RMB500 million (USD73 million). Mengdong Germanium, located in Xilingol Economic and Technological Development Zone, will engage in the development, production and sales of both primary and high-end germanium products.

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Asian Metal: How does the idea of founding Mengdong Germanium come up?

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Mr. Zhang: Firstly, from 2006 to 2007, due to the rapid growth in the demand, germanium prices rose fast and the increase was up to 70%. Germanium deep-processed products are high-tech and high-value-added ones, so we are confident in the industry. Secondly, Xilingol is rich in germanium coal resources and the recoverable reserves reach 3,226t, which is a big advantage to develop the germanium deep-processing industry. Thirdly, it is the local government’s long-standing desire to promote and develop germanium high-tech industry and the government’s strong support is our backup.

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Asian Metal: What advantages does Mengdong Germanium have to cope with the fierce competition in the industry?

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Mr. Zhang: Firstly, we have the resources advantage. Mengdong Energy is the mother company of Ximeng Wulantuga Coal Co., Ltd (referred to as Wu Coal), which supplies the raw material to Mengdong Germanium. Wu Coal owns the total mining right of the coal, containing around 3,226t of germanium metal, the biggest primary germanium resources in China so far. Secondly, we have a patent technology of whirlpool stove extracting germanium and it raises the yield of germanium.

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Asian Metal: What is the difference of mining germanium coal in Xilingol, Inner Mongolia province, compared with that in Lincang, Yunnan province?

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Mr. Zhang: Xilinhot, Inner Mongolia has rich lignite reserves and the contained germanium resources account for around 60% of the recoverable resources in China, while the portion of germanium in Yunnan province accounts for around 20%. In addition, it is easy to exploit the coal in Xilingol by open-pit mining, since the mine is around ten meters under the surface of the earth, while producers in Lincang employs underground exploit method and the costs are high. However, the content of germanium in Xilinhot lignite is lower than that in Lincang, while the former’s calorific value is higher than that in Lincang, so the comprehensive utilization of coal in Xilinhot is superior to that in Lincang.

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Asian Metal: Mengdong Germanium has the cogeneration demonstration project of coal, germanium, heat and power, could you introduce the project?

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Mr. Zhang: On the basis of germanium-rich lignite in Xilingol, we extract germanium and manufacture deep-processed products and at the same time, the waste heat produced in extracting germanium in whirlpool stoves will be used as the local heating and power generation source. In this case, it will form a circular economy industrial chain to realize the comprehensive utilization of coal resources. Ashes in the extraction of germanium will be used to make cement, floor tiles, hollow bricks and other construction materials, which help increase the comprehensive utilization rate and lower production costs.

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Asian Metal: There are other germanium producers in Xilingol. What are the relationships between Mengdong Germanium and others?

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Mr. Zhang: In Xilingol, there are two other germanium manufacturers, Tongli Germanium and Guolian Resources. The end product of Tongli Germanium is high purity germanium dioxide, and Tongli Germanium and Mengdong Germanium belong to the same group. Mengdong Germanium has nothing to do with Guolian Resources, which is an independent company and does not have germanium resources.

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Asian Metal: What products will Mengdong Germanium produce? What are the designed capacities?

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Mr. Zhang: The annual designed capacities include 60t of optical fiber-grade germanium tetrachloride, 10t of high purity germanium dioxide, 20t of germanium metal and 10t of germanium crystal, equivalent to around 60t of germanium metal. Although we have a wealth of resources, we will not explore them blindly. The production will be determined by the orders and we hope to participate in establishing an orderly and competitive germanium market.

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Asian Metal: How does the project process recently?

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Mr. Zhang: Mengdong Germanium has two production parks: one is finishing park and the other fire refining park. The finishing park, including reduction plant, zone melting workshop, crystal workshop and finishing plant, has been completed, and equipment installation and commissioning have also finished. We conducted a pre-trial production on August 7, 2009 and began small-scale production on Dec 7, 2009. It is expected that the fire refining park will run into operation in the second half of 2010.

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Asian Metal: What do you think of the germanium market? Do you think it will go down?

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Mr. Zhang: Germanium is one of scarce resources. Although the market is affected by the global economic recession, the price has bottomed out. With the economy recovers next year, germanium price will rise again.

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Asian Metal: Thank you again for accepting the interview.

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Mr. Zhang: My pleasure.