Technology Innovation Heralds the Development of the Nonferrous Metals Industry

The Ministry of Industry and Information Technology (MIIT) recently formally published“Development Plan for Nonferrous Metal Industry in the ‘Twelfth Five Year Plan’ Period”(hereinafter referred to as the “Plan”), and a sub-plan “Development Plan for Aluminum Industry in the ‘Twelfth Five Year Plan’ Period”. Judging from its text, apart from aggregate control, structural adjustment, and energy saving & emission reduction which have been emphasized previously, as an increasingly important work task, technology innovation will become a highlight of the nonferrous metals industry during the “Twelfth Five Year Plan”period.

When interpreting the Plan, officials of the MIIT specially explained that precious rare earth metals are rare strategic resources, relevant departments are compiling “Development Plan for the Rare Metal Industry”, therefore, there is no mention of them in the Plan.

“The development of strategic emerging industries and national defense science and technology industry needs staunch support from the nonferrous metals industry, it is also necessary to make significant breakthroughs in highgrade, precision and advanced product development.” The Plan mentions that it’s imperative to focus on making breakthroughs in core key technologies and generic basic technologies. It demands that during the “Twelfth Five Year Plan” period, “large and middle sized key enterprises must establish well-developed technology innovation system, with R&D investment accounting for 1.5% of main business income”.

In contrast, at the end of the “Eleventh Five Year Plan” period, the R&D expenditure of nonferrous metals enterprises only accounted for 0.65% of main business income, which is lower than the average level in the domestic industry. According to the Plan, in the aspect of technology innovation standard, China’s nonferrous metals enterprises presented a pattern of“having few self developed new materials, basically imitating overseas enterprises in the development of new alloys, and lagging behind the development needs of strategic emerging industries in the development of key nonferrous metals new materials”.

For a long time in the past, the development of China’s nonferrous metals industry mainly exists in the form of scale expansion. In 2010,China’s output of ten nonferrous metals was 31,210,000 tonnes; the apparent consumption was about 34,300,000 tonnes, respectively growing by 13.7% and 15.5% during the “Eleventh Five Year Plan” period on average.

However, with the continual development of China’s manufacture industry, especially strategic emerging industries, there has risen a higher demand for nonferrous metal type products. Traditional metal smelting business and low-end products are hardly able to gain advantage in fierce market competition, especially industries with obvious surplus in production output such as electrolytic aluminum industry,for a long period prices hovered around the cost line, in 2010 the operating rate was only 70%,in the winter of 2011 loss was also reported across the industry.

Nevertheless, at the same time, thick aluminum sheet for aviation and space use, and highly pure metal for integrated circuit use still mainly depend on import, there are numerous enterprises in the industry, but their strength is weak, a typical case of “surplus of low-end products, and void in high-end products”.

According to the Plan, by 2015, China’s development of key new alloy varieties must make significant breakthroughs, China must develop the production capacity of 200,000 tonnes of high-end aluminum alloy sheets such as aluminum alloy sheet for auto use, 150,000 tonnes of high strength magnesium alloy die casting pieces, profiles and sheets, and 20,000 tonnes of high-end titanium products; make breakthroughs in key functional materials, so as to basically meet the needs in big aircraft, railway transport, energy saving and new energy automobile, and electronic information fields.Aggregate control and structural adjustment continue to remain focus of work for the nonferrous metals industry in the near future.

In 2010, the output of China’s ten nonferrous metals was 31,210,000 tonnes, the apparent consumption was about 34,300,000 tonnes. According to the Plan, by 2015, China’s output of ten nonferrous metals will be controlled at around 46,000,000 tonnes, the annual average growth rate will reach 8%, Wherein, the outputs of refined copper, electrolytic aluminum,lead, zinc will be kept at 6,500,000 tonnes,24,000,000 tonnes, 5,500,000 tonnes and 7,200,000 tonnes respectively; the annual average growth rates will be 7.3%, 8.8%, 5.2% and 6.9% respectively.

The Plan estimates that by 2015, the apparent consumption of China’s ten nonferrous metals will reach 49,000,000 tonnes. Wherein,copper and lead will remain in short supply,and need to depend on import as supplementation. On the other hand, the metal variety with the highest annual average growth rate in consumption volume is magnesium, in the“Twelfth Five Year Plan” periods its annual average growth rate will reach 26.7%, followed by titanium and antimony, growing by 16.1%and 9.2% respectively.

According to industry insiders, the above three metals are all minor metals, they are highly associated with emerging industries, their growth space in the new material field will attract considerable attention. When interpreting the Plan,relevant MIIT officials also said that by 2015,the percentage of added value of nonferrous metal new material products in industrial added value will increase to 15%, up from 8% in 2010.

Progress in industry merger and restructuring will also be accelerated. According to data disclosed by the Plan, in 2010, the smelting output of top 10 enterprises in China accounted for 76%, 67%, 45%, 50%, and 55% in total national output for copper, electrolytic aluminum,lead, zinc, and magnesium respectively. By 2015, the smelting output of top 10 enterprises in total national output will be adjusted to 90%,90%, 60%, 60% for copper, electrolytic aluminum, lead, and zinc respectively. It is evident that according to the plan, the merger and restructuring in the electrolytic aluminum industry will be most active.

The Plan also specially mentioned strategic reserve of nonferrous metal varieties, saying that for rare metal and specific ore varieties under protective mining, their production will be based on mandatory plan issued by the state government, export control will be strengthened; it will also study and set up a “nonferrous metal strategic reserve system which integrates mine and real object, national strategic reserve and commercial reserve”.