Outlook

Status Challenge

2017

Yunnan Tin Group (Holding) Company Limited

China Tin Industry Status and Outlook

Song Xingcheng

CONTENTS

Current Situation of China Tin Industry 01

Challenges Facing China Tin Industry 02

Outlook of China Tin Industry 03

01 4. Tin trade continues net import with growth of

imported raw material

5. Tin market is oversupplied with low volatility of price

I、Current Situation of China Tin Industry

1. China Tin reserves is decreasing year by year

2. Resources and smelting industries are centralized

3. Industry technology is leading the world

1 China Tin reserves is decreasing year by year

I、Current Situation of China Tin Industry

- China basic tin reserves:

1,100kt (by end 2016)

23.40% of global

- Output is far more than

new reserves increase

- Tin reserves is decreasing

Static mine life < 7 years

Tin reserves World China

Resources and smelting industries are centralized 2

98% Resources

located in 6 provinces

Smelting industry centralization: with top 10 smelting capacities accounting for 84%

China tin resources is mostly located in Yunnan, Guangxi, Hunan, Inner Mongolia, Jiangxi and Guangdong Province

Tin production is centered in 5 provinces: Yunnan, Guangxi, Hunan, Inner Mongolia and Jiangxi

99% Production

centered in 5 provinces

Top 10 smelting capacities accounts for 84%

I、Current Situation of China Tin Industry

1

2

3 The production process and techniques of tin profiles and

chemicals leads the world.

High degree of mechanization, less environmental

pollution, high comprehensive recovery, high level of

automation.

Industry technology is leading the world 3

I、Current Situation of China Tin Industry

The tin smelting technology of Ausmelt furnace, Galvanothermy

Mechanical Crystallizing and vacuum furnace refining are the most

advanced in the world.

Tin trade continues net import with growth of imported raw material 4

China has the largest tin

resources and production in

the world; however, it is a net

importer of both tin raw

material and refined tin.

Since 2007, China has turned

to be a net importer for tin,

especially after 10% export

duty imposed in 2008. The

import amount peaked at 30kt

at one time.

Severe supply shortage, 40%-

50% of material relies on

import.

Refined tin output: 150-170kt

p.a., tin concentrates: 80-100kt

tin p.a.

I、Current Situation of China Tin Industry

China tin concentrates production and import

tin concentrates production tin concentrates import

China refine tin import and export

import export

Tin market is oversupplied with low volatility of price

I、Current Situation of China Tin Industry

5

China tin market keeps to be

slightly oversupplied in short

term, under the background of

enough raw material and less tin

export.

In 2017, Chinese tin price

fluctuates in a small range.

Surplus in short term and stock

rising supress price rising.

2017 SHFE Base Metals Price Index

CU AL ZN PB NI SN

II、Challenges facing China Tin Industry

1. Shortage of raw material challenges tin production

2. Technical and management innovation are keys to

transform and upgrade tin industry under stricter

environment policy

3. Policy changes impel China tin industry to “Go Global”

02

Shortage of raw material challenges tin production

II、Challenges facing China Tin Industry

1

Since 2010，under environmental protection

pressure and technology constraints , the

decline of tin concentrates & secondary tin

production have been made up by imported

raw material.

In 2017， tin price keeps at a high level.

Chinese refined tin production increased to

170000 tons with 3% growth compared to

2016.

In future，tin ore priduction will be difficult

to increase, tin ore import is full of

uncertainty, and secondary tin relies on

technical breakthrough. The shortage of raw

material is challenging tin production.

China tin production structure

Domestic Tin Conc. Imported Tin Conc. Secondary Tin

Mine Smelting Down- stream Processing

Both EP and operating pressure increase

Profit declines Risks increase

Facing transformation of Chinese

manufacturing industry

- Mine safety, EP, automation &

compliance need to be improved

Facing risks of rising cost and

volatile price, will actively seek

change and progress in

management, technology and

management.

The consumption of tin profiles and chemicals

is moving towards environmental protection

and high-tech industry.

It is critical to explore new technologies and

new products, and to rapidly occupy the field

of high technique and efficiency.

Technical and management innovation are keys to transform and upgrade tin industry

under stricter environment policy

II、Challenges facing China Tin Industry

2

Spot trade will be in circulation between domestic and foreign markets. Create closer interaction and exert profound impact on future China tin trade pattern. Urge Chinese companies to further participate in international competition and all-round cooperation from fund, technique, professionals to resources. Healthier industry development and broader international influence.

Issued export quota

of tin and tin product

Imposed 10%

export duty on

tin product Cancelled export tariff and

quotas on refined tin;

Permits Yunnan Tin to do

feeding processing trade

。

Policy changes impel China tin industry to “Go Global”

II、Challenges facing China Tin Industry

3

2002 2008

2017

III、Outlook of China Tin Industry

1. Supply-side reform improves quality and efficiency

2. Industrial policy drives the decrease of tin consumption

3. National strategy expands new market in tin industry

4. Conclusion

03

Environmental supervision Restrict credit and production

Improve supply quality

《Specification of tin industry》

Improve supply efficiency

Supply-side reform

eliminate backward production and

backward technologies

Raise industry standard

Stop repetitive construction

Restrain the expansion of new capacity

Enterprise Integration

Improving the scale and profitability of

the industry

Production process, safety and EP

measures meet theStandards

Capacity matches market demand

III、Outlook of China Tin Industry

Supply-side reform improves quality and efficiency of tin supply 1

Chinese manufacturing transformation and upgrading

Expand more application fields in the process of

development of green economy, new industries and

emerging products

Urbanization brings tin consumption growth

Real estate investment, infrastructure construction,

electronic and communication manufacturing

industry development

Innovation and development

of information industry

Intelligent terminal, semiconductor industry

transfer, AI and IOT

"Made in China 2025"

Promote the development of advanced manufacturing

and high-end equipment

III、Outlook of China Tin Industry

Industrial policy drives the decrease of tin consumption 2

The rapid development of China's industrial Internet in the next decade is expected to generate about $2 trillion of GDP

growth, with a forecast of 20,000 tonnes of refined tin demand, with an average of 1500-2000 tons/year of tin consumption.

III、Outlook of China Tin Industry

One Belt One Road China's comparative advantage industries will be exported to 64 countries along the One Belt And One Road: resources development technology, infrastructure construction, "Internet +" economy, electronic communication etc.

Coordinated Development for the Beijing-Tianjin-Hebei region

Promote tin consumption transformation in electronic information and chemical industry. Electronics: big data, solar pv, communication and navigation equipment, semiconductor lighting, tablet display, application electronics; Chemical industry: new materials, new energy, high-end equipment manufacturing, biopharmaceutical.

Yangtze River Economic Zones

Upgrade tin consumption: increase investment in infrastructure, improve the level of urbanization and electronicinformation communication, build transportation network, accelerate the development of new energy.

In 2016，China's direct investment in countries along the One Belt And One Road has reached us $14.5 billion, accounting for 8.5% of China's investments abroad, jumping 46.02% from 2011, which is expected to reach $150 billion in next 5 years.

National strategy expands new market space in tin industry 3

Capacity matches market

Upgrade on technique, management,

competitiveness and profitability

Production process and green standards meet targets

More centralized Industry 消费仍将维持小幅增长

国内供需将逐步紧平衡

Maintain a modest growth on consumption

AND

Enter into the positive development cycle

III、Outlook of China Tin Industry

Conclusion 4

AN Shortage of raw material

Short supply in the mid-and-long term

Optimistic on the demand

Domestic supply and demand tend to be balanced

III、Outlook of China Tin Industry

Conclusion 4

China Tin consumption forecast (unit：tonnes)

China tin consumption will maintain a

modest growth, and keep stable in the field

of traditional consumption and relatively

optimistic on new industry, new energy,

new materials and chemical industry.

Look ahead, while the development environment

of China tin industry is complex and changeable,

the investment structure, technology transition,

competition and cooperation still face a great

challenge; however, compared with the past,

China tin industry is developing into a positive

cycle.

We are confident to d e v e l o p a better and

sustainable China tin industry with our efforts.

Outlook

Status Challenges

2017

Yunnan Tin Group (Holding) Company Limited

THANK YOU!

Song Xingcheng