Zeng Zhengmao: Manganese industry faces hardships, while still promising

Asian Metal: Good day, Mr. Zeng. Thank you for granting this interview. Could you please make a brief introduction of your company?

Zeng: Tycoon Manganese Group owns manganese flake mills with production capacity of 50,000tpy, which is fully operating currently. In addition, our manganese project in Malipo, Yunnan Province, equipped with manganese mines, as well as power plants, is planned to be completed and start production of 100,000tpy in April, 2014.

Asian Metal: What are the reasons for expanding production halts in “Chinese Manganese Triangle”?

Zeng: Affected by gloomy economy, demand for manganese metals weakened in the first half of this year, which leads to the lowest market price of the recent five year. Therefore, many producers ceased production due to great losses. Among “Chinese Manganese Triangle”, Jishou, Hunan Province sees the lowest operating rate of less than 30% for the time being; 50% of production is released in Songtao, Guizhou Province and 70% of producers are still at work in Xiushan, Chongqing, which has manganese ore advantages over other regions.

Asian Metal: Could you please evaluate future price trend from the perspective of production costs?

Zeng: Both prices of manganese mines and commercial power, which are the two largest parts of manganese costs, have kept upward trend in general from 2008 on. Although some regions conduct power price for wet season in this summer, it remains at high level when compared with the current manganese prices, and is unlikely to decrease further within this year. In addition, there is not much room for manganese mines prices to drop, either. Therefore, manganese prices will cease falling and even see rebounds in the near future as long as the government does not offer considerable financial subsidies.

Asian Metal: Will Chinese export volume of manganese metals witness increases in this very first year after cancelation of export duty?

Zeng: Affected by gloomy global economy, as well as the strike of low carbon ferromanganese, actual export volume of Chinese manganese metals is hard to increase this year. But with the prices hitting the bottom, some overseas end users became more active to purchase the materials recently. We believe that Chinese manganese metals export volume will total about 300,000t in 2013, relatively stable over that in 2012.

Asian Metal: Which level do you expect Chinese manganese flake output to reach in 2013?

Zeng: According to statistics, output of Chinese manganese flake was 1,160,000t in 2012, and I think it will decrease a bit this year in face of weak demand from downstream industries.

Asian Metal: Will poor market performance accelerates integration within Chinese manganese industry?

Zeng: Sure, survival of the fittest requires it. But it’s worth pointing out that those who will be eliminated are not necessarily the smaller ones, but the weaker ones.

Asian Metal: What are Tycoon’s advantages in production over other producers and how will the company ensure successes in future competition?

Zeng: Our production advantages are mainly reflected in manganese mines and environmental facilities at the moment. Tycoon will continue to keep high quality as the first priority and spare no efforts to enhance cooperation with end users both at home and abroad, seizing opportunities to make us stronger.

Asian Metal: The 8th Minor Metal Summit will be held by Asian Metal in Sanya, Hainan Province during October 23-25th, 2013. What’s your expectation of the coming summit?

Zeng: Tycoon always keeps good cooperation with Asian Metal. I hope to share views on topics of concern adequately with all participants. I wish the summit a complete success!

Asian Metal: We appreciate your support giving us your valuable time and we wish a bright future for Tycoon.