Non-ferrous Metal Reserve System Desiderated at Guangxi

“A sound reserve system was a must if we wish to raise our voice the international market.Without it, our industry will be subject to manipulations.” Lan Tianli, Municipal CCP Secretary of Hechi City, Guangxi Province, the city known as Town of Non-ferrous Metal in China,told the reporter and called for a non-ferrous metal reserve system in Guangxi, which was abundant with non-ferrous metal resources.

Lan said that Guangxi was now building a RMB100 billion non-ferrous metal industry. As far as the long-term sustainable development was concerned, the RMB100 billion industry indicated that we could rely on the abundant resources, enterprise clusters and advantages in factor combination. However, how could such advantages support the long-term development of our pillar industry? Firm control on the industrial chain and say in the market were a must for the RMB100 billion industry. Without the say, this gigantic industry would be subject to manipulations.

Lan suggested that a reserve system be established by the government as the supporting policy for the RMB100 billion industry, which was aimed to engage enterprise through market operations and supports from financial institutions and to integrate the whole no-ferrous metal industry with reserves in order to form an industrial “aircraft carrier” instead of thousands of barges.

In fact, scores of indium plants in Hechi have already established an enterprise-led reserve system under the support of financial institutions to fight against unfair pricing of international buyers. In 2009, the alliance members started to reserve zinc ingots when the zinc price slumped to RMB12,000. In Jan. 2010, the zinc ingot price soared to RMB20,000, making handsome profits for these plants. In addition to zinc ingots, they also have large reserves of indium.

Mr. Liu Zhengdong, Municipal CCP Secretary of Baise, also voiced his support for the establishment of a non-ferrous metal reserve system.Baise was building the largest aluminum processing and manufacturing base in China and Asia. He said: “The price of electrolytic aluminum once slumped by 50% in the financial crisis last year, seriously impacting the aluminum plants of Baise. In order to change the market situation, Yinhai Aluminum, with the RMB500 million financial support from Guangxi Investment Group, purchased 50,000 tons of electrolytic aluminum, and a private plant in Pingguo County also reserved some electrolytic aluminum. By means of reservation, the price was effectively pushed upward.”

Zhang Yuanxin, Director of DPC Guangxi, told reporter that the reserve system was very helpful to the RMB100 billion non-ferrous metal industry, and the government was actively studying on the feasibility of non-ferrous metal reserve system. As non-renewable resources,non-ferrous metals’ market price was often manipulated by international buyers. Guangxi as a major province of non-ferrous metals should take measures against market impact in addition to making scientific plan for the industrial development.” He mentioned especially that stable development and controlled production was a must for strategic resources like indium, and reserve should be used in market adjustment.