2007: An Hard Times for EMD Business
DAMENG
2007: An Hard Times for EMD Business Li Tongqing CITIC Dameng Mining Industries Ltd
IMI EPD China Meeting, May 21, 2008 Sanya, Hainan, China CITIC DAMENG MINING INDUSTRIES LIMITED
The headlines for 2007 EMD business DAMENG were marked by a lot of depressed events: • The prices of all raw materials for EMD production increased substantially in 2007, and will likely continue to soar to new heights in 2008. • The weakening of US dollar reduced most EMD producers’ local currency (RBM. AUSD, EURO) selling price, and will continues to do so in the future. • The global EMD market remained over-supplied in 2007, and pricing was very competitive. The market selling prices had not afforded the recovery of higher ore cost and other inputs cost increases. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
International Oil Price Trends 2000-2007
CITIC DAMENG MINING INDUSTRIES LIMITED
Price Curve for Mn Ore DAMENG
43-45% CIF China
USD/mtu 2007-04-10--- 2008-04-10
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Selected Foreign Exchange Rate Trends to US Dollar in 2007 RMB
AUS D
EURO
S.A. Rand
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
• Greece, Japan and US initiated separately anti-dumping investigations concerning EMD. The EMD produced by Delta in South Africa is subject to a 17.1% antidumping duty in Europe. • After shutdown of EMD plants in Japan (Mitsui) , India (Eveready India) and Brazil in 2006, Delta declared that it is no longer able to compete globally and will close its EMD plant in Australia in March 2008. • Most of EMD producers worldwide experienced substantial cost increases, vigorous price competition, resulting poor financial performance in 2007. CITIC DAMENG MINING INDUSTRIES LIMITED
Global EMD Business: DAMENG
2007 World EMD Production Capacity Country
Company
MT/Y
Country
Company
China
14 companies
Japan
MT/Y
210,000
US
Erachem
24,000
Tosoh
34,000
US
Eveready
12,000
Greece
Tosoh
18,000 Australia
Delta
27,000
Spain
Cegasa
6,000
South Africa
Delta
30,000
US
Tronox
26,500
India
MOIL
1,000
Total: 388,500
CITIC DAMENG MINING INDUSTRIES LIMITED
2007 World EMD Production Capacity DAMENG
China 54.05%
South Africa 7.72%
India 0.26%
Australia
Spain
6.95%
1.54% Japan US
Greece
16.09%
4.63%
8.75%
CITIC DAMENG MINING INDUSTRIES LIMITED
EMD Exports by Country
DAMENG
Country
2006
Unit: MT
2007
Change %
China
52,758
47,057
- 10.81
Japan
29,341
24,138
- 17.73
Australia
24,000e
27,096
+ 36.54
South Africa
25,696
22,085
- 14.05
Greece
12,327e
13,872
+ 12.53
Spain
5,307
6,856
+ 29.19
Total
149,429
141,104
- 5.57
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 Major EMD Exports by Country South Africa 15.78%
Australia 18.62%
Greece 9.91%
Japan 17.25%
Spain 4.80%
China 33.63% CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 China EMD Exports by Country Total: 47,057 MT
Morocco 1.9%
Thailand 4.6%
Korea 0.8%
Japan 11.8%
Philippines 1.4% Vietnam 2.7%
India 14.0%
Indonesia 24.2%
Germany 5.6%
Colombia 1.3% U S 19.3%
Hong Kong 1.1%
Singapore 1.0%
Others 9.2%
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 EMD Imports from Australia by Country Total: 27,096 MT U S 60.23%
Thailand 0.45%
Malysia 3.33% China 5.06% Japan 24.38%
Korea 3.35%
Belgium 2.73%
India 0.48%
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 S. Africa EMD Exports by Country Total 22,085 MT Belgium 66.67%
Others 2.16% Pakistan 0.95%
China 2.45%
US 0.83% Japan 16.79%
Data DataSource: Source:South SouthAfrica AfricaCustoms Customs
Mozambique 3.57%
Brazil 6.58%
CITIC DAMENG MINING INDUSTRIES LIMITED
Japan EMD Exports
DAMENG
2001- 2007 Japan EMD Exports 35 29.802
30
29.341
Indnsia 30.79%
29.086
23.854 22.452
24.138
20.400
20
Sngapo 15.94%
Others 22.66%
15 10
Korea 5.23%
5
07
China 12.14%
US 13.23%
20
06
20
05
20
04
20
03
20
02
20
01
0
20
×1000 MT
25
2007 Japan EMD Exports
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 EMD Imports from Greece by Country Total -- 13,872 MT
Singapore 14.42%
Germany 40.49%
Others 0.41%
Switzerla nd 26.14%
Belgium 18.53% CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 EMD Imports from Spain by Country Total – 6,856 MT Poland 31.20%
Japan 36.17%
Others 2.13%
Belgium 30.50% CITIC DAMENG MINING INDUSTRIES LIMITED
2007 Major EMD Imports by Country
Unit: MT
DAMENG
Country
2006
2007
Change %
US
36,861
30,118
- 13.44
Belgium
24,798
27,152
+ 9.49
Indonesia
21,760
19,841
- 8.82
Japan
14,050
18,300
+ 30.25
Germany
11,019
11,078
+ 0.54
Singapore
5,742
7,243
+ 26.14
China
7,942
6.161
- 22.43
India
8,966
6,730
- 24.94
South Korea
4,000
2,985
- 25.37
Switzerland
3,065
3,824
+ 24.76
Thailand
2,981
3,451
+ 15.77
Poland
2,146
2,763
+ 28.75
934
1,788
+ 91.43
144,501
141,434
Malaysia Total
- 2.12
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 Major EMD Imports by Country Total 141,434 MT
CHINA 4.36%
INDIA 4.76%
S.KOREA SWITZLD 2.70% 2.11%
THAILD 2.44%
POLAND 1.95% MALYSIA 1.26%
SNGAPO 5.12% US 21.29%
GERMANY 7.83%
JAPAN 12.94% INDNSIA 14.03%
BELGIUM 19.20% CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
1996 – 2007 US Imports of EMD
60000 50626
49354
50000 40690 40000
30000
32954
38129
36861
35340 31940
30118
25893
20000
10000
MT 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2006 - 2007 US EMD Imports by Country
2006 36,861 MT Austral 37%
2007 30,118 MT Japan 11.80%
Japan Austral 17.60% 55%
Belgium 1.23%
Belgiu 1.71%
Brazil 0.37%
Braz 0.7 Other 0.66 China 41.54%
Others 2.43% China 30.03%
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 Belgium EMD Imports by Country Total: 27,152 MT Others 5.90% Spain 7.70%
South Africa 67.46%
Germany 6.75% Greece 9.47% Australia 2.72% CITIC DAMENG MINING INDUSTRIES LIMITED
Japan EMD Imports by Country
DAMENG
20000
Others
18000
Spain
16000
Belgium Australia
14000
S.Africa
12000
China
MT 10000
18,300 18,300
13,399 13,399
14,050 14,050
6,981 6,981
8000 6000 4000
1,764 1,764
2,289 2,289
3,222 3,222
2000 0
2001
2002
2003
2004
2005
2006
2007
CITIC DAMENG MINING INDUSTRIES LIMITED
Indonesia EMD Imports by Country 2001 – 2007
DAMENG
25000 17,693 17,693
20000
18,751 18,751
19,452 19,452
20,771 20,771
21,760 21,760 19,841 19,841
MT
14,910 14,910
Brazil
15000
Japan China
10000 5000 0
2001
2002
2003
2004
2005
2006
2007
Indonesia is the third largest EMD import country in the world. CITIC DAMENG MINING INDUSTRIES LIMITED
Singapore EMD Imports by Country 2000 – 2007
DAMENG
12000
10,004 10,004 8,645 8,645
10000 8000 MT
6000
7,199 7,199
6,459 6,459
7,275 7,275
7,243 7,243 5,979 5,979
5,090 5,090
4000
Australia Greece Brazil China Japan
2000 0
2000 2001 2002 2003 2004 2005 2006 2007 CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 China EMD Market Review (1)
• Recent statistic data on Dry Battery and EMD business in China. (see tables below) • The steady growth of production and export of primary MnO2 battery have increased the demand for EMD in China year after year.
CITIC DAMENG MINING INDUSTRIES LIMITED
The Production of Primary MnO2 Battery in China 2000 - 2007 35 30 25 Billions Units
DAMENG
20 15 10 5 0
Alkaline C-Zn
2000
2001
2002
2003
2004
2005
2006
2007
2.2 14.6
2.7 14.6
3.3 16.5
4 20.6
5 20.6
6 24
7 21
8.2 21.1
Data DataSource: Source:China ChinaBattery BatteryIndustry IndustryAssociation Association
CITIC DAMENG MINING INDUSTRIES LIMITED
China Exports of Primary MnO2 Battery DAMENG 2000-2007 25 19.1
Billions Units
20 15.2
15
12.5
13.1
2000
2001
19.9
20.44
21.34
16.2
10 5 0
2002
2003
2004
2005
2006
2007
Data DataSource: Source:China ChinaBattery BatteryIndustry IndustryAssociation Association
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Statistic Data of EMD Business in China 2006-2007 Items
2006
2007
Producers
16
14
200,000
210.000
+ 5.00%
(t)
160,000
159,839
- 0.001%
(t)
-
78,387
Alkaline Grade (t)
-
81,542
Capacity (tpa) Total Output C-Zn Grade
Increase Rate
Export ( t )
52,758
47,057
- 10.81%
Import ( t )
7,942
6,161
- 22.42%
29.44%
- 3.53%
Export ratio
32.97%
CITIC DAMENG MINING INDUSTRIES LIMITED
2001-2007 China EMD Exports
DAMENG
60
52758 47057
50 38258 ×1000 MT
40 30
34399 23552
23403
24962
2001
2002
2003
20 10 0
2004
2005
2006
2007
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 China EMD Market Review (2)
The EMD manufacturers in China experienced an hard times in 2007, and suffered one impact follows another: --- Dramatic increase in raw materials (especially Mn ore, sulfuric acid, etc.) and other inputs cost. --- The anti-dumping waves initiated by Japan, EU and US, where the main EMD consumers are located. --- The 13% tax rebate attaching to EMD exported from China have been withdrawn since 1, July, 2007. --- The continued weakening of US Dollar reduced the EMD exporters’ RMB selling price. --- The tightening supply of Mn ore and oversupply market for alkaline EMD have resulted reduced operation rates. --- Most of EMD manufacturers experienced losses, and 6 EMD plants with small-scale have been shutdown during 2007. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Outlook: The Trends of Change (1)
•
The prices for all primary raw materials continue soaring so far this year.
•
The US Dollar devaluates more sharply since the beginning this year.
•
The US ITA of Commerce determined preliminarily on March 20, 2008, that EMD imported from Australia and China will be subject to 120.59 % and 236.81% anti-dumping duties respectively in US, while Japan will announce to impose antidumping duties to EMD imported from Australia, China, South Africa and Spain.
•
After the withdrawal of long-standing capacity from the market, The over-supplied situation of world EMD market may be partly mitigated.
•
EMD prices will inevitably be increased worldwide to levels that allow EMD producers to recover cost increases and continue production with least margins.
•
Nowadays, the incredible growth of electronic devices has driven the demand up for battery, and thus more EMD are needed in the future markets. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Outlook: The Trends of Change (2)
• The leading center of EMD industry in China has shifted from Hunan to Guangxi, a province in southern China rich in manganese ore resources. • The wide price gap between EMD and EMM (Electrolytic Manganese Metal) has driven EMD producers to consider shifting to EMM production. Items
Unit
EMM
EMD
Mn Content
%
99.7
61
Plant Investment
%
100
300 - 400
Selling Price
RMB/MT
24,500
10,500
• In fact, some top long-standing EMD manufacturers in China are setting up their EMM plants now. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Outlook: The Trends of Change (3)
EMD Project in Vietnam According to a report of Vietnam news agency, the construction of USD12,5 million EMD factory in Cao Bang province began on April 26, 2008. The plant will have a annual EMD capacity of 10,000 MT. Most equipment and technology of the plant were transferred from Japan’s Tokyo Boeki Steel and Materials Company, and 99.6% of the plant’s product will be exported to Japan and European markets. The plant is expected to be operational in the second quarter of 2009. CITIC DAMENG MINING INDUSTRIES LIMITED
2007: An Hard Times for EMD Business Li Tongqing CITIC Dameng Mining Industries Ltd
IMI EPD China Meeting, May 21, 2008 Sanya, Hainan, China CITIC DAMENG MINING INDUSTRIES LIMITED
The headlines for 2007 EMD business DAMENG were marked by a lot of depressed events: • The prices of all raw materials for EMD production increased substantially in 2007, and will likely continue to soar to new heights in 2008. • The weakening of US dollar reduced most EMD producers’ local currency (RBM. AUSD, EURO) selling price, and will continues to do so in the future. • The global EMD market remained over-supplied in 2007, and pricing was very competitive. The market selling prices had not afforded the recovery of higher ore cost and other inputs cost increases. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
International Oil Price Trends 2000-2007
CITIC DAMENG MINING INDUSTRIES LIMITED
Price Curve for Mn Ore DAMENG
43-45% CIF China
USD/mtu 2007-04-10--- 2008-04-10
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Selected Foreign Exchange Rate Trends to US Dollar in 2007 RMB
AUS D
EURO
S.A. Rand
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
• Greece, Japan and US initiated separately anti-dumping investigations concerning EMD. The EMD produced by Delta in South Africa is subject to a 17.1% antidumping duty in Europe. • After shutdown of EMD plants in Japan (Mitsui) , India (Eveready India) and Brazil in 2006, Delta declared that it is no longer able to compete globally and will close its EMD plant in Australia in March 2008. • Most of EMD producers worldwide experienced substantial cost increases, vigorous price competition, resulting poor financial performance in 2007. CITIC DAMENG MINING INDUSTRIES LIMITED
Global EMD Business: DAMENG
2007 World EMD Production Capacity Country
Company
MT/Y
Country
Company
China
14 companies
Japan
MT/Y
210,000
US
Erachem
24,000
Tosoh
34,000
US
Eveready
12,000
Greece
Tosoh
18,000 Australia
Delta
27,000
Spain
Cegasa
6,000
South Africa
Delta
30,000
US
Tronox
26,500
India
MOIL
1,000
Total: 388,500
CITIC DAMENG MINING INDUSTRIES LIMITED
2007 World EMD Production Capacity DAMENG
China 54.05%
South Africa 7.72%
India 0.26%
Australia
Spain
6.95%
1.54% Japan US
Greece
16.09%
4.63%
8.75%
CITIC DAMENG MINING INDUSTRIES LIMITED
EMD Exports by Country
DAMENG
Country
2006
Unit: MT
2007
Change %
China
52,758
47,057
- 10.81
Japan
29,341
24,138
- 17.73
Australia
24,000e
27,096
+ 36.54
South Africa
25,696
22,085
- 14.05
Greece
12,327e
13,872
+ 12.53
Spain
5,307
6,856
+ 29.19
Total
149,429
141,104
- 5.57
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 Major EMD Exports by Country South Africa 15.78%
Australia 18.62%
Greece 9.91%
Japan 17.25%
Spain 4.80%
China 33.63% CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 China EMD Exports by Country Total: 47,057 MT
Morocco 1.9%
Thailand 4.6%
Korea 0.8%
Japan 11.8%
Philippines 1.4% Vietnam 2.7%
India 14.0%
Indonesia 24.2%
Germany 5.6%
Colombia 1.3% U S 19.3%
Hong Kong 1.1%
Singapore 1.0%
Others 9.2%
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 EMD Imports from Australia by Country Total: 27,096 MT U S 60.23%
Thailand 0.45%
Malysia 3.33% China 5.06% Japan 24.38%
Korea 3.35%
Belgium 2.73%
India 0.48%
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 S. Africa EMD Exports by Country Total 22,085 MT Belgium 66.67%
Others 2.16% Pakistan 0.95%
China 2.45%
US 0.83% Japan 16.79%
Data DataSource: Source:South SouthAfrica AfricaCustoms Customs
Mozambique 3.57%
Brazil 6.58%
CITIC DAMENG MINING INDUSTRIES LIMITED
Japan EMD Exports
DAMENG
2001- 2007 Japan EMD Exports 35 29.802
30
29.341
Indnsia 30.79%
29.086
23.854 22.452
24.138
20.400
20
Sngapo 15.94%
Others 22.66%
15 10
Korea 5.23%
5
07
China 12.14%
US 13.23%
20
06
20
05
20
04
20
03
20
02
20
01
0
20
×1000 MT
25
2007 Japan EMD Exports
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 EMD Imports from Greece by Country Total -- 13,872 MT
Singapore 14.42%
Germany 40.49%
Others 0.41%
Switzerla nd 26.14%
Belgium 18.53% CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 EMD Imports from Spain by Country Total – 6,856 MT Poland 31.20%
Japan 36.17%
Others 2.13%
Belgium 30.50% CITIC DAMENG MINING INDUSTRIES LIMITED
2007 Major EMD Imports by Country
Unit: MT
DAMENG
Country
2006
2007
Change %
US
36,861
30,118
- 13.44
Belgium
24,798
27,152
+ 9.49
Indonesia
21,760
19,841
- 8.82
Japan
14,050
18,300
+ 30.25
Germany
11,019
11,078
+ 0.54
Singapore
5,742
7,243
+ 26.14
China
7,942
6.161
- 22.43
India
8,966
6,730
- 24.94
South Korea
4,000
2,985
- 25.37
Switzerland
3,065
3,824
+ 24.76
Thailand
2,981
3,451
+ 15.77
Poland
2,146
2,763
+ 28.75
934
1,788
+ 91.43
144,501
141,434
Malaysia Total
- 2.12
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 Major EMD Imports by Country Total 141,434 MT
CHINA 4.36%
INDIA 4.76%
S.KOREA SWITZLD 2.70% 2.11%
THAILD 2.44%
POLAND 1.95% MALYSIA 1.26%
SNGAPO 5.12% US 21.29%
GERMANY 7.83%
JAPAN 12.94% INDNSIA 14.03%
BELGIUM 19.20% CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
1996 – 2007 US Imports of EMD
60000 50626
49354
50000 40690 40000
30000
32954
38129
36861
35340 31940
30118
25893
20000
10000
MT 0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2006 - 2007 US EMD Imports by Country
2006 36,861 MT Austral 37%
2007 30,118 MT Japan 11.80%
Japan Austral 17.60% 55%
Belgium 1.23%
Belgiu 1.71%
Brazil 0.37%
Braz 0.7 Other 0.66 China 41.54%
Others 2.43% China 30.03%
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 Belgium EMD Imports by Country Total: 27,152 MT Others 5.90% Spain 7.70%
South Africa 67.46%
Germany 6.75% Greece 9.47% Australia 2.72% CITIC DAMENG MINING INDUSTRIES LIMITED
Japan EMD Imports by Country
DAMENG
20000
Others
18000
Spain
16000
Belgium Australia
14000
S.Africa
12000
China
MT 10000
18,300 18,300
13,399 13,399
14,050 14,050
6,981 6,981
8000 6000 4000
1,764 1,764
2,289 2,289
3,222 3,222
2000 0
2001
2002
2003
2004
2005
2006
2007
CITIC DAMENG MINING INDUSTRIES LIMITED
Indonesia EMD Imports by Country 2001 – 2007
DAMENG
25000 17,693 17,693
20000
18,751 18,751
19,452 19,452
20,771 20,771
21,760 21,760 19,841 19,841
MT
14,910 14,910
Brazil
15000
Japan China
10000 5000 0
2001
2002
2003
2004
2005
2006
2007
Indonesia is the third largest EMD import country in the world. CITIC DAMENG MINING INDUSTRIES LIMITED
Singapore EMD Imports by Country 2000 – 2007
DAMENG
12000
10,004 10,004 8,645 8,645
10000 8000 MT
6000
7,199 7,199
6,459 6,459
7,275 7,275
7,243 7,243 5,979 5,979
5,090 5,090
4000
Australia Greece Brazil China Japan
2000 0
2000 2001 2002 2003 2004 2005 2006 2007 CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 China EMD Market Review (1)
• Recent statistic data on Dry Battery and EMD business in China. (see tables below) • The steady growth of production and export of primary MnO2 battery have increased the demand for EMD in China year after year.
CITIC DAMENG MINING INDUSTRIES LIMITED
The Production of Primary MnO2 Battery in China 2000 - 2007 35 30 25 Billions Units
DAMENG
20 15 10 5 0
Alkaline C-Zn
2000
2001
2002
2003
2004
2005
2006
2007
2.2 14.6
2.7 14.6
3.3 16.5
4 20.6
5 20.6
6 24
7 21
8.2 21.1
Data DataSource: Source:China ChinaBattery BatteryIndustry IndustryAssociation Association
CITIC DAMENG MINING INDUSTRIES LIMITED
China Exports of Primary MnO2 Battery DAMENG 2000-2007 25 19.1
Billions Units
20 15.2
15
12.5
13.1
2000
2001
19.9
20.44
21.34
16.2
10 5 0
2002
2003
2004
2005
2006
2007
Data DataSource: Source:China ChinaBattery BatteryIndustry IndustryAssociation Association
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Statistic Data of EMD Business in China 2006-2007 Items
2006
2007
Producers
16
14
200,000
210.000
+ 5.00%
(t)
160,000
159,839
- 0.001%
(t)
-
78,387
Alkaline Grade (t)
-
81,542
Capacity (tpa) Total Output C-Zn Grade
Increase Rate
Export ( t )
52,758
47,057
- 10.81%
Import ( t )
7,942
6,161
- 22.42%
29.44%
- 3.53%
Export ratio
32.97%
CITIC DAMENG MINING INDUSTRIES LIMITED
2001-2007 China EMD Exports
DAMENG
60
52758 47057
50 38258 ×1000 MT
40 30
34399 23552
23403
24962
2001
2002
2003
20 10 0
2004
2005
2006
2007
CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
2007 China EMD Market Review (2)
The EMD manufacturers in China experienced an hard times in 2007, and suffered one impact follows another: --- Dramatic increase in raw materials (especially Mn ore, sulfuric acid, etc.) and other inputs cost. --- The anti-dumping waves initiated by Japan, EU and US, where the main EMD consumers are located. --- The 13% tax rebate attaching to EMD exported from China have been withdrawn since 1, July, 2007. --- The continued weakening of US Dollar reduced the EMD exporters’ RMB selling price. --- The tightening supply of Mn ore and oversupply market for alkaline EMD have resulted reduced operation rates. --- Most of EMD manufacturers experienced losses, and 6 EMD plants with small-scale have been shutdown during 2007. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Outlook: The Trends of Change (1)
•
The prices for all primary raw materials continue soaring so far this year.
•
The US Dollar devaluates more sharply since the beginning this year.
•
The US ITA of Commerce determined preliminarily on March 20, 2008, that EMD imported from Australia and China will be subject to 120.59 % and 236.81% anti-dumping duties respectively in US, while Japan will announce to impose antidumping duties to EMD imported from Australia, China, South Africa and Spain.
•
After the withdrawal of long-standing capacity from the market, The over-supplied situation of world EMD market may be partly mitigated.
•
EMD prices will inevitably be increased worldwide to levels that allow EMD producers to recover cost increases and continue production with least margins.
•
Nowadays, the incredible growth of electronic devices has driven the demand up for battery, and thus more EMD are needed in the future markets. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Outlook: The Trends of Change (2)
• The leading center of EMD industry in China has shifted from Hunan to Guangxi, a province in southern China rich in manganese ore resources. • The wide price gap between EMD and EMM (Electrolytic Manganese Metal) has driven EMD producers to consider shifting to EMM production. Items
Unit
EMM
EMD
Mn Content
%
99.7
61
Plant Investment
%
100
300 - 400
Selling Price
RMB/MT
24,500
10,500
• In fact, some top long-standing EMD manufacturers in China are setting up their EMM plants now. CITIC DAMENG MINING INDUSTRIES LIMITED
DAMENG
Outlook: The Trends of Change (3)
EMD Project in Vietnam According to a report of Vietnam news agency, the construction of USD12,5 million EMD factory in Cao Bang province began on April 26, 2008. The plant will have a annual EMD capacity of 10,000 MT. Most equipment and technology of the plant were transferred from Japan’s Tokyo Boeki Steel and Materials Company, and 99.6% of the plant’s product will be exported to Japan and European markets. The plant is expected to be operational in the second quarter of 2009. CITIC DAMENG MINING INDUSTRIES LIMITED
