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Chinese Nickel Industry

Wang Ye, BGRIMM April 2008, Lisbon

Content

� Chinese nickel mining industry � Chinese refined nickel production� Chinese Ni pig iron production� Chinese nickel consumption　� BGRIMM’s work

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Chinese nickel mining industry

� Chinese nickel mining industry

Chinese nickel mining industry

Chinese nickel proven reserve and resource by 2006 kt-Ni

5389.64333.35286.72727.22318.7109

ResourceBase

reserveResource

Base reserve

Reserve

Accumulated proven reserve and resource

Current proven reserves and resource

Mine number

Data source: the Ministry of Land and Resource P.R.C

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Chinese nickel reserve/resource distribution

Chinese nickel mining industry

Data source: the Ministry of Landand Resource P.R.C

Chinese nickel mining industry

Characteristics of Chinese nickel mines

� Sulphide ore account for 90% of reserve � Reserve of sulphide ore with average grade over 1%

accounting for 44.1% � Underground mines accounting for 68% of total reser ves� 11 nickel operating mines, with 81% of total China’ s reserves

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Chinese nickel mining industry

Chinese nickel mine production kt-Ni

Growth rate between 2002~2007: 12.2%.Growth rate between 2008~2010: 5.0%

Chinese nickel mine production in 2007

Major nickel mine producer: Jinchuan , 2007 production 59 kt-Ni, 61.8% of China’s nickel mine production.

0

20

40

60

80

100

120

2002 2003 2004 2005 2006 2007 2008(f) 2009(f) 2010(f)

Unit:KT-Ni

production

95kt

Data source: BGRIMM

Data source: BGRIMM

Chinese nickel mining-investment outside of China

Off-shore nickel projects invested by the Chinese c ompanies

--70kt-Ni shareTasmania, Australia JINCHUAN

--185.5Total

2008-8.5Mnari, ZambiaJINCHUAN

2010-22Mwetaung,BurmaZIJIN

2010-22Camariocas, CubaTISCO

2009-30Dagon Hill,BurmaNFC

20092006.1033Ramu, Papua New GuineaMCC

Commission year

Starting year

Capacity kt-Ni

ProjectCompany

Data source: BGRIMM

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Chinese Refined Ni production (incl. salts)

� Chinese refined nickel production

Chinese Refined Ni production (incl. salts)

Chinese Refined Ni (incl Ni Salts ) production kt-Ni

Growth rate of refined nickel production in 2002~20 07: 18.8%Growth rate of refined nickel production in 2008~20 10: 9.9%

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60

80

100

120

140

160

180

200

2002 2003 2004 2005 2006 2007 2008(f) 2009(f) 2010(f)

Kt-Ni

Nickel saltsand others

Refinednickelproduction

Data source: BGRIMM

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Chinese Refined Ni production (incl. salts)

Chinese refined nickel production in 2007

Major producer: Fukang Smelter

Major producer: Jinchuan

Major producer: Ji’en

Major producer: Yunnan Tin Group

Major producer: Yulin

XINJIANG 3.47%

GANSU81.35%

YUNNAN

1.27%GUANGXI

0.97%

CHONGQING

1.45%

Data source: BGRIMM

Low nickel pig iron

� Background: Starting from ferrous-alloy producers in 2005. And developed rapidly in the past three years.

� Feeds sources: Philippine, Indonesia, New Caledonian

� Process: Electric furnace and blast furnace with capacity <=300 m3

� Usage: for SS production

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Low nickel pig iron

• Low Ni pig iron production in 2005~2007 : av. 9.3%• laterite imports in 2005~2007 : av. 11%

Low Ni pig iron production and laterite import kt-Ni

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20

40

60

80

100

120

140

160

180

2005 2006 2007 2008(f) 2009(f) 2010(f)

kt-Ni

Low Ni pig iron production Laterite import Data source: BGRIMM

Low nickel pig iron

Current situation� Many blast furnaces stopped production � Some producers transferred to produce Cr-Fe and Mn- Fe� Some producers transferred to produce NiS with later ite and S� Large quantity of laterite was stockpiled in ports

Due to� Nickel price fluctuating � Stainless steel producers cutting production� Power shortage in some provinces� Government’s restrain on the industries with high

environmental pollution and energy consumption� Government announced the ban of eliminated blast fu rnaces

for ferrous-alloy production transferring to produc e other products in mid 2007

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Low nickel pig iron

New trend� Electric furnace is replacing blast furnace� Quality of nickel pig iron is improving� Restructure of nickel pig iron industry: large

producers with capacity over 100 kt/a will be dominant in the market.

Low nickel pig iron

Conclusion:

� Low Ni pig iron production in 2008~2010: av. 11.2%

� Laterite import in 2008~2010: av. -7.5%

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Chinese nickel recycling

Nickel recycling

� Production: 15 kt/a� Feeds: scrap battery, electroplating slime,

spent catalyst� Production areas: Hebei, Jiangsu, Hunan,

Guangdong

Chinese nickel consumption

� Chinese nickel consumption

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Chinese nickel consumption

Chinese primary nickel consumption kt-Ni

Growth rate of primary nickel consumption in 2002~2 007: 34.3%

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50

100

150

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250

300

350

400

450

2002 2003 2004 2005 2006 2007 2008(f) 2009(f) 2010(f)

kt-Ni

Apparent consumption Data source: BGRIMM

Chinese nickel consumption

Breakdown of Chinese Nickel Consumption

Stainless steel70%

Electroplating15%

Battery7%

Alloy andcasting

5% Others3%

Stainless steel Electroplating Battery

Alloy and casting Others Data source: BGRIMM

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Chinese nickel consumption

Chinese stainless steel production kt

Growth rate of SS production in 2002~2007: 46.4%

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12000

2002 2003 2004 2005 2006 2007 2008(f) 2009(f) 2010(f)

kt

SS production Data source: China SS Association

Chinese nickel consumption

What happened in 2007: Due to high nickel price, the SS producers� Cut production� Increased the percentage 400 series, while decrease d the percentage of

300 series and 200 series� Increased the usage of SS scraps� Increased the usage of low nickel pig iron, while d ecreased the usage of

refined nickel

Chinese SS production structure in 2006 Chinese SS p roduction structure in 2007

300 series49%

400 series22%

200 series29%

200 series

300 series

400 series

200 series26%

400 series29%

300 series45%

Data source: China SS Association

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Chinese nickel consumption

Conclusion:

Growth of SS production and primary nickel consumption will slow down in 2008~2010.

� SS production: 11.7%.� Primary nickel consumption: 5.8%

Chinese nickel Import & Export

Chinese primary nickel im & ex kt-Ni

2003~2007 2008Total import av. 18.2% -12.7%Total export av. 19.2% -25%Refined Ni import: av. 12.3% -13.5FeNi import: av. 61.9% -14.3%

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90

120

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180

2003 2004 2005 2006 2007 2008(f)

Import Export Refined nickel import FeNi import Data source: BGRIMM

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Chinese nickel Import & Export

Export duties on major nickel products

0%10%Ni scraps

0%5%High purification Ni

1%20%FeNi

0%15%Ni anode for electroplating

0%15%Nickel alloy

0%15%Refined nickel

0%15%Nickel ore/concentrates

Import dutyExport DutyItem

Some nickel products involved in forbidden tolling business

ExportNickel anode for

electroplating

ExportNickel and nickel alloy

powder

ExportNickel scraps

ExportNickel alloy

ExportRefined nickel

ExportNickel matte

ExportFeNi

ImportNickel ore and

concentrate

Forbidden byItem

Purpose: Limit the export of primary nickel and nickel raw materials. Encourage the import of primary nickel and nickel raw materials. Background: China’s high foreign surplus. China is short of nickel resource and other nickel raw materials.

Data source: China Customs

BGRIMM’s work

What we do?

� Professional team engaged in nickel market research � More than 10 years’ working experience� Detailed database of China’s nickel mines, Smelters , refineries and

stainless steel producers� Supplying service to many international companies an d organizations

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China Nickel Industry

Thank you!

Wang YeEmail: Yeawang@163.net

Tel:+86-10-88399496Fax: +86-10-88399497