----Interview with Zhao Li
Deputy General Manager
Guizhou Kaili Minyuan Manganese Industry Co.
Kali Minyuan Manganese Industry Co., located in Kaili Lushan Circular Economy Development Zone, covers an area of 150 mu. The company was founded in January 2011 with a total investment of 430 million yuan, including 150 million yuan on the first phase and 280 million yuan on the second phase. The company has 5 technical personnel and 10 graduates from colleges and universities. The founder has been engaged in the operation of silicomanganese alloy for a long time, and has established a reliable, smooth and stable supply and demand marketing network system in China.
Asian Metal: Hello, Mr. Li! Thank you for accepting the interview by Asian Metal, please introduce your company first.
Mr. Li: Our company was founded in January 2011 with a total investment of 430 million yuan, including 150 million yuan on the first phase and 280 million yuan on the second phase. At present, the two submerged arc furnaces of 13,000kVA of the first phase and one of the two submerged arc furnaces of 25,000kVA of the second phase are under operation, and the other submerged arc furnace of 25,000kVA of the second phase has been ready for a long time, but still remains out of poduction due to insufficient power load. In 2019, the annual output value of the company reached around 520 million yuan, and the annual electricity consumption reached about 278 million kWh with the the electricity charge of 136 million yuan; In 2020, the annual output value reached about 572 million yuan, and the annual electricity consumption reached 397 million kWh with 192 million yuan paid for electricity and 5.41 million yuan for tax; In 2022, the annual output value achieved about 780 million yuan, the annual electricity consumption recorded about 400 million kWh with the electricity charge of 190 million yuan.
Asian Metal: Please introduce your company's equipment and main business distribution.
Mr. Li: We currently have one submerged arc furnace of 25,000kVA and two submerged arc furnaces of 13,000kVA for silicomanganese production. We are now upgrading another submerged arc furnace of 25,000kVA and plan to start in September this year. We expect to achieve normal operation of the furnace from early next year. The annual output of two submerged arc furnaces of 13,000kVA of the first phase reaches more than 50,000t, and the annual output of two submerged arc furnaces of 25,000kVA of the second phase would be more than 100,000t. After all the four furnaces are put into operation, the annual output will reach 150,000t and the annual output value will reach more than 1.2 billion yuan. Under the same output, the new submerged arc furnace that we use can save 40,000 kWh of electricity per day, which means that we could save about 13.3t of coal per day or 5,000t a year based on the generation of 3000kWh by one ton of coal. We adopt the most advanced low-voltage compensation equipment, low-voltage dynamic reactive power compensation equipment and corresponding process for our substation so that we can save about 5.4-14.4 million kWh; By contacting the electrode plane with conductive element, our compound electrode system also can help save 8-16 million kWh of electricity, which means another saving of over 200 kWh of electricity for one ton of silicomanganese production. In total we can save 80,000 kWh of electricity per day, or 10,000 tons of coal consumption per year. Regarding the environmental protection, we adopt the most advanced negative pressure technology to recycle the ore dust to form pellet and then put into the furnace again to improve the utilization rate of raw materials, and the manganese ore recovery rate reaches more than 95% presently. In addition, our main business is the production and sales of silicomanganese. We mainly cooperate with Shenglong Iron and Steel, Hualing Lianyuan Iron and Steel, Southeast Iron and Steel, Xinxin Iron and Steel and so on.
Asian metal: Please briefly introduce the current market of silicomanganese in China.
Mr. Li: Recently, due to the continuous price increase of manganese ore and the high prices of metallurgical coke, the current prices of silicomanganese increased from the previous month. In addition, as the production cost of silicomanganese in South China is slightly higher than that in North China, the steel mills in South China are more optimistic and have higher acceptance of the price. The target prices from mainstream mills this month were only slightly higher than the general production costs, but the final purchase prices were higher than their target prices. Under the continuous upward cost pressure, the purchase prices of steel mills in the third quarter will be higher than those in May and June.
Asian metal: Regarding the policy of the Ministry of Industry and Information Technology that the production capacity of crude steel should decrease year by year before 2025, what do you think of the supply and demand of silicomanganese this year?
Mr.Li: In 2020, Chinese crude steel output was 1.065 billion tons. Last year, the output dropped to 1.033 billion tons, a YoY decrease of 3%. In the first quarter of 2022, the national crude steel output dropped by about 10% YoY. Even if the output of steel mills would increase in the second half of the year, the demand for silicomanganese in 2022 would decrease slightly YoY. In addition, the supply in 2021 reduced due to the Dual-Control policy on energy consumption in the main silicomanganese producing areas in the second half of the year. While there is no news of production reduction or shutdown this year. So the output in 2022 would exceed that in 2021. On the whole, the supply of silicomanganese this year will exceed the demand.
Asian metal: What is the impact of the epidenmic on the silicomanganese market?
Mr. Li: Recently the domestic epidemic has repeatedly occurred and the raw material transportation of silicomanganese factories in some areas has been affected. However, the production in major producing provinces such as Inner Mongolia, Ningxia, and Guangxi is basically normal, so the output of silicomanganese would not change much. On the other hand, because the operating rates of mainstream steel mills have declined since the second quarter, the demand for silicomanganese has declined since May, resulting in the fact that the mainstream prices also dropped by about RMB200-300/t during the period. We hope that COVID-19 will end soon, but we are also well prepared to deal with the main risks, especially in logistics.
Asian metal: This year, the inventory of import manganese ore at ports has been declining, and prices from overseas suppliers remain high. How do you judge the coming manganese ore market?
Mr. Li: The inventory of manganese ore in China's ports has dropped from about 6.5 million tons last year to less than 4 million tons now, and this trend has not slowed down. According to the current inventory, we predict that the prices of manganese ore will remain at high level in Q3. In addition, the recent Russian-Ukrainian conflict has hindered the export of manganese ore and manganese-based alloys in Ukraine. Suppliers from other countries have increased their purchases of manganese ore to meet the increased demand of alloy export market, which also supported the prices of manganese ore. In the short term, the prices of high-grade manganese oxide ore in the third quarter will not drop significantly, and the prices of low-grade manganese ore from South Africa has room to rise.
Asian metal: Please give us a brief introduction of your company's development plan next year.
Mr. Li: Our plans for the next year are as follows: first, we plan to start up our newly built mineral hot furnace to ensure stable production and energy consumption control. Second, we plan to expand business and have more cooperation with new steel mills. Besides, China is a country with very limited manganese ore resources, while South Africa, Australia and other countries are very rich in manganese ore resources. We hope to cooperate with our peers to jointly establish a common raw material procurement channel. Through centralized large-scale procurement, the purchase prices of imported manganese ore can be reduced, so that the production costs of silicomanganese producers can be reduced. Our company has been purchasing imported manganese ore with large manganese ore suppliers for a long time and has established long-term cooperative partnerships. The company plans to import about 10,000 tons of manganese ore per month on average. Due to the cost reduction during purchasing, the company improves its product competitiveness. The company has won strong support from local and municipal governments. After we solve the problem of power load, we will put the second furnace of 25,000kVA into production to make a better contribution to the economic development of Kaili city.
Asian Metal: Thanks for your wonderful sharing! Wish your company further success!
Mr. Li: Thank you! I wish Asian Metal further success as well!
