The Minor Metals Trade Association held its inaugural seminar in Hong Kong in early November. The event attracted close to 80 participants from China and the rest of the world keen to find out about the issues facing the industry today.
This is a new seminar, set to be the first in a series of events in Asia, which underscores the association’s growing membership in China and is designed to build closer links with these new members.
Major issues under discussion included the trade war between the USA and China, the impact of environmental legislation in China, the country’s expansion via the Belt and Road initiative, as well as looking at some specific minor metals markets and how they are responding to the requirements of, for instance, responsible sourcing and chemical regulation.
In his opening speech, the MMTA Chairman, Simon Boon, drew attention to the work of the association’s Asia Committee, which involves increasing interactions with existing members and helping them solve problems faced in doing business on the international stage. He noted that Chinese membership continues to grow and has been supported by the MMTA employing a dedicated Chinese-speaking member of staff.
The trade war was certainly a major topic of discussion during the day with speakers noting the impact the imposition of tariffs against Chinese raw materials and products is already having on Chinese sellers and US buyers.
The MMTA has been supporting its members in the USA by responding to a request by the USTR for comments on proposals that would have seen a blanket 25% tariff applied to China including a wide range of minor metals and their components.
Noah Lehrman, chairman of the MMTA’s N America committee, said the association surveyed its membership and asked how they would be affected. Members responded suggesting that they would lose sales by having to sell at higher prices, which they wouldn’t be able to pass on to their customers, and the possibility of retaliatory tariffs would also be negative.
As a result of submitting members’ opinions, together with a range of other industry submissions, Lehrman said a whole raft of exclusions were then released which fortunately included exemptions for a raft of minor metals.
The concern that US President Trump may have imposed tariffs on the remaining $280bn worth of products in December which would have included all minor metals, was allayed at the end of November when the US President met his Chinese counterpart Xi Jinping for a face-to-face discussion and agreed to halt new trade tariffs for 90 days to allow for talks.
At a post-G20 summit meeting in Buenos Aires, President Trump agreed not to boost tariffs on $200bn of Chinese goods from 10% to 25% on 1 January. In return China will buy a “very substantial” amount of agricultural, industrial and energy products.
As a result, the Renminbi had its strongest day since 2016 after having fallen in recent months against the dollar to below RMB7:£1 the lowest rate since the financial crisis. There is still concern, however, about what will happen after the 90 days’ halt.
Indium Corp’s Director Metals Business Unit, Donna Vareha-Walsh agreed that the trade war has affected the indium market. Indium is not currently on the trade list, “but there was a lot of lobbying about it,” she said. However, China has incrementally increased the duty on imports of indium since September 24 up to 5% on wrought metal and 10% on unwrought material which has consequences for the market.
Asked about the impact of the trade war, Calvin Ho, Senior Associate at Herbert Smith Freehills, told attendees that there had been two effects. First, China hadn’t thought the US would go so far and that had caused a shock. Second, it would mean that China would probably have to dial back on its Made in China 2025 policy, which might see a reduction in the number of domestic product components sourced in Chinese products from 70% to perhaps 40-50%.
Ho said core policy in China is focusing on a number of areas pertinent to the minor metals industry including new 5G networks, developing new battery technologies, aerospace and hi-tech in aerospace as well as railways, new medical devices and new energy, including solar, wind and thermal power.
Speaking on China’s environmental policies, Liu Mai, Deputy Secretary General at CNIA’s Bismuth, Indium, Germanium Branch, said that government policies will only get stricter. Production curtailments will affect the supply of minor metals as production facilities are encouraged to upgrade and renew. Liu said 2020 will be a milestone year as water and soil policies are adopted.
Charles Swindon, Director at RJH Trading, reiterated the impact that China’s environmental policies are having on the minor metals sector. As strict policies are being enforced, the production of antimony, aluminium, vanadium, bismuth, magnesium, lead and silicon as well as other metals are being affected. China is also pushing to clamp down on illegal production and smuggling.
“Smelters are complaining about the tightness in the concentrates market and are being forced to use low-grade antimony concentrates and ore with 40% or less content,” Swindon told delegates, questioning whether there will be a shift from China’s control over the global antimony market. “China controlled 90% of the world’s production, but that is now about 70-75%. However, we are seeing Chinese producers fighting aggressively to get ore and concentrates from overseas. We don’t think this control over the market will dip any further,” he said.
During the afternoon’s session there were two papers focusing on the responsible supply of cobalt and tantalum. Bryce Lee, Director of CSR, at Huayou Cobalt Co Ltd, told participants about the Responsible Cobalt Initiative (RCI) in China and what it is doing to ensure the cobalt supply chain from the Democratic Republic of Congo is more transparent. Speaking on tantalum, Sue Shaw, analyst at Roskill Information Services, said that blockchain is just starting to be used to increase traceability and transparency in the market. But more due diligence on the supply chain in the DRC is required. Ultimately, recycling of both cobalt and tantalum is improving and this will see the development of a secondary supply chain, which will to some extent address sourcing issues.
This event was kindly sponsored by PGS