Xue Wang, RUIDOW.COM

2017 Mar 15, Perth

China’s Zircon supply, demand and downstream implications

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2

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analysis is on basis of authors’ professional understanding. The report correctly

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CONTENTS

3

China’s zircon supply

China’s zircon demand

China’s zircon price

Future outlook

4

China’s Zircon Supply - Overview

4

2015 2016 Y-O-Y

Domestic sands 22 18 -18%

Imported sands 422 417 -1.2%

Sands separatedfrom imported concentrates

186(465) 291(605) 56.4%

Total (kt) 630 726 15.2%

Source: Ruidow, Customs

5

Domestic3%

Imported97%

Domestic

Imported

China’s Zircon Supply – Domestic zircon sands

Zircon supply structure 2016

6

40 kt in 201118 kt in 2016

Hainan

China’s Zircon Supply – Domestic supply

7

China’s Zircon Supply – Zircon sands import origins 2016

Australia 53.1%

Indonesia 5.4%

Kenya 5.6%

South Africa 32.3%

8

China’s Zircon Supply – Concentrate import origins 2016

Mozambique106 kt, 17.5%South Africa

9.5%

Sierra Leone10.1%

Nigeria1.9%

Pakistan4.2%

Australia 270kt, 44.6%

Kenya 2.3%

China’s Zircon Sands Supply – Import volume 2016

9

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

2016/1 2016/3 2016/5 2016/7 2016/9 2016/11

t

Finished Zircon Sands Concentrates

417kt finished zircon sands 605kt concentrates and tailings

China’s Zircon Supply – Australia Import 2016

10

Australian sands

0

200

400

600

800

1000

1200

0

10000

20000

30000

40000

50000

60000

70000

2016/1 2016/2 2016/3 2016/4 2016/5 2016/6 2016/7 2016/8 2016/9 2016/102016/112016/12

USD/tt

Finished Zircon Sands Concentrates & Tailing Price of Finished Price of Concentrates

260 222

161

113

0

100

200

300

400

500

2012 2013 2014 2015 2016

Finished Zircon Sand Zircon Concentrates & Tailing

39.0%

24.5%

23.7%

5.8%7.0% Xiamen

Nanjing

Qingdao

Huangpu

Others

Finished Zircon Sands by Customs

Concentrates & Tailing by Customs

49.5%

37.5%

8.1%

2.1%1.9% 0.9%

Xiamen

Shantou

Haikou

Zhanjiang

Guangzhou

Others

kt

China’s Zircon Supply – South Africa Import 2016

11

0

200

400

600

800

1000

1200

0

5000

10000

15000

20000

25000

30000USD/tt

Finished Zircon Sands Concentrates & Tailing Price of Finished Price of Concentrates

38.9%

24.2%

20.7%

8.5%

4.8% 2.8%

Qingdao

Xiamen

Nanjing

Huangpu

Dalian

Others

Finished Zircon Sands by Customs

Concentrates & Tailing by Customs

32.4%

28.7%

12.1%

11.2%

6.5% 9.1% Xiamen

Guangzhou

Qingdao

Haikou

Zhanjiang

Others134

46

0

50

100

150

200

250

2012 2013 2014 2015 2016

Finished Zircon Sand Zircon Concentrates & Tailing

South African sands

kt

China’s Zircon Supply – Kenya and Indonesia Import 2016

12

0

200

400

600

800

1000

1200

0

500

1000

1500

2000

2500

3000

3500

2016/1 2016/2 2016/3 2016/4 2016/5 2016/6 2016/7 2016/8 2016/9 2016/10 2016/11 2016/12

USD/tt

Kenya Indonesia Price of Kenya Price of Indonesia

Kenya and Indonesia sands

Kenya 25.5 kt for 2016Indonesia 22.8 kt for 2016

China’s Zircon Supply – Concentrates Import 2016

13

Import Originsvolume（t）

Averageimport price（USD/t）

Major import areas

Mozambique 105573 394 Haikou、Zhanjiang、Xiamen

Sierra Leone 61255 184 Xiamen

Pakistan 25176 417 Zhanjiang、Maoming、Wanning

Sri Lanka 22104 227 Maoming

Madagascar 8500 577 Qingyuan、Zhanjiang

Vietnam 6814 473 Qinzhou

China’s Zircon Supply – Concentrating process

14

Concentrate

Magnetic separation

Ilmenite Non-magnetic ore

Gravity separation

Rutile Crude sand

Electric separation

Magnetic separation

Zircon sand

Dry

China’s advantages• Cheap labor• Monazite easily imported• Professional process and equipment

Schematic process diagram

Monazite

China’s Zircon Supply – Domestic concentrator distribution

15

regionsEstablished

ones

Hainan 8

Fujian 4

Guagndong 8

Guangxi 6

Shandong 3

Liaoning 2

Wanning, Hainan

Zhanjiang, Guagndong

Qinzhou, Guangxi

Zhangzhou, Fujiang

Zibo, Shandong

China’s Zircon Supply – Zircon Sands applicability

16

Zircon sands

Chemical

Refractories

Precision casting

Silicate & powder

Australian sandsIndonesian sandsKenya sands

South African sandsHainan sands

Australian sands

All sands

China’s Zircon Demand – Zircon Sands downstream application

17

Zircon sands

Zirconium silicate

ceramics

Zircon powder

Ceramics

Precision casting

ZOCChemical products

Fused zirconia

Ceramics

Refractories

Refractories

Precision casting

China’s Zircon Demand – Demand Overview 2016

18

Demand breakdown

41.4%

22.9%

11.7%

13.3%

10.8%Zirconium silicate&zircon powder

ZOC

Fused zirconia

Refractories

Precision casting

Zircon sands demand 603.4 kt in 2016, y-o-y 4%

China’s Zircon Demand – Silicate manufacturer distribution

19

Guangdong 10

Jiangsu 4

Shandong 6

Fujian 7

Henan 1

Anhui 1

Guangxi 1Capacity 500 kt/Y

China’s Zircon Demand – ZOC manufacturer distribution

20

Guangdong 1

Zhejiang 2

Shandong 5

Jiangxi 2

Capacity 300 kt/Y

China’s Zircon Demand – Fused zirconia manufacturer distribution

21

Guangdong 1

Anhui 1

Liaoning 2

Fujian 3

Henan 4

Shandong 1

China’s Zircon Demand – Ceramics

22

Resource：Chinese website

It hit historic high in 2016. 50 cities transaction area was 37.1 million sqm2 per month, up 20% y-o-y.

China’s house transaction volume (unit: 0,000 sqm2)

Monthly turnover area Yearly turnover area

China’s Zircon Demand – Ceramics

23

Resource：房天下

Housing price rose significantly, Average price close to RMB 50,000 - 60,000 per sqm2 in Beijing and Shanghai.

China’s house transaction price ( average for 100 cities, unit: RMB)

China’s Zircon Demand – Ceramics

24

China’s tiles production

In 2016, tiles production output was 11 billion sqm2, up 1.81% y-o-y;of which, ceramic tiles output was 8.3 billion sqm2, up 0.23%; porcelain tiles output 2.7 billion sqm2, up 7%.

• Glazed porcelain tiles would be the mainstream• Large size more popular• Full-body marble tiles more popular than ever

China’s tiles trend

China’s Zircon Demand – Ceramics

25

1

Henanmore than 200

bathroom enterprises

production halt and rectification

2

Jiangximore than 20

ceramic factories rectified within

specific time

3

Ziboceramic manufactures emission was forbidden at night and production was suspended or cut during G20 Summit.

4

Hebei

coal burning replaced by gas burning

China’s environmental protection policies 2016

China’s Zircon Price – Historical price

26

0

500

1000

1500

2000

2500

3000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

22,000

CIF (USD/t)Incl.Tax (RMB/t)

Hainan Zircon sand Iluka-MB Zircon sand

Price for 2010 - 2016

China’s Zircon Price – Price for 2016

27

920

970

1020

1070

1120

1170

6500

6700

6900

7100

7300

7500

7700

2015/12 2016/2 2016/4 2016/6 2016/8 2016/10 2016/12 2017/2

CIF (USD/Ton)Incl.Tax (RBM/Ton)

Hainan Zircon sand Iluka-MB Zircon sand

$50 /t

$75 /t$30 /t

$50 /t

Price for 2016

Future Outlook

28

• Going Global

• Speeding up IPO process

• Aiming for future merger

• Expanding industrial chains

29

23-25 May 2017Kunming, China

30

24-26 May 2017Kunming, China

Thank you!

• Wang xue

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