City Government Notice on the Printing and Distribution of the Xuancheng City Non- ferrous Metals Industry Adjustment and Revitalization Plan

Xuan Zheng [2009] No. 79

All county, city, and governments, city departments, and directly-subordinate divisions:

Xuancheng City Non-ferrous Metals Industry Adjustment and Revitalization Plan is hereby printed and distributed to you. Please be practical and conscientiously organize its implementation.

December 31, 2009

Xuancheng City Non-ferrous Metals Industry Adjustment and Revitalization Plan

The non-ferrous metals industry is one of our city’s major basic raw materials industries with relatively great advantages and potential; and one of the priority industries for cultivation in our city. This plan has been formulated in order to promote scientific industry development, improve equipment and technology, increase product variety and added-value, extend industry chains, improve economic efficiency and competency, and facilitate a better and accelerated development of the non-ferrous metals industry. We have formulated this plan on the basis of the Province Non-Ferrous Metals Industry Adjustment and Revitalization Plan, with consideration for our own situation. The plan is for the period of 2009 to 2011.

I. Current Status of our City's Non-ferrous Metals Industry

After ten years of rapid growth, the city's entire copper and aluminum processing industries have begun to take shape based on a solid foundation, and a major processing base for scrap copper and aluminum has been formed in Anhui province. The city currently has 21 large non-ferrous metal processing companies with total assets of 1.355 billion RMB. In 2008, the non-ferrous metal industry had a total sales revenue of 13.108 billion RMB, with 24.73 percent consisting of large enterprise sales revenue. There are six large non-ferrous metal mining and processing companies, with mined metals including copper ore, aluminum ore, and tungsten ore, of which the total sales revenue was 210 million RMB in 2008.

(I) The Copper Processing Industry

Xuancheng has 15 large-scale copper processing companies, which are located in , , County, Jing County, and Jixi County.

1. Production capacity and output. Xuancheng's copper processing production capacity is about 500,000 tons. In 2008, copper production was 247,000 tons and sales revenue was 12.565 billion RMB, with 23.71 percent consisting of large enterprise sales revenue. Tax revenue amounted to 402 million RMB, which constituted 24.65 percent of the city's total large enterprise tax revenue. Copper processing has become a very important part of Xuancheng's economy.

2. Technology and equipment. The technology and equipment in the copper processing industry range from advanced, to commonplace, to poor. The Jinrun Copper Plant in Langxi County is an example of an enterprise with advanced technology and equipment. It is equipped with German Krupp continuous casting and rolling process technology, German Siemens programmable control technology, a German Niehoff MM85 double end wire drawing machine, an Italian Youle Levon annealing wire drawing machine, and German SPECTRO direct reading spectrometer detection equipment and eddy current testing equipment. Xuancheng's Baolong Copper LLC is an example of an enterprise with commonplace technology and equipment. Its smelting furnaces are either oil-fired or gas-fired reverberatory furnaces; it uses the oxygen-enriched air floating smelting process; and it has patented, and has the intellectual property ownership of the "conjoined undercurrent tilting furnace continuous caster."

3. Main products. The main products of our copper processing industry are bright, low- oxygen copper rods and various types of soft bare copper wire. The bright, low-oxygen copper rods are mainly 8mm in diameter and the soft bare copper wire is mainly 3mm in diameter

(II) The aluminum processing industry

Xuancheng has six large-scale aluminum processing companies. They are mostly located in the city itself, Xuanzhou District, Guangde County and the city of . Xuancheng's aluminum production capacity is about 80,000 tons. In 2008, the total aluminum production was 60,500 tons, sales revenue was 540 million RMB, and tax revenue totaled 22 million RMB. The main products of the aluminum processing industry are: various types of aluminum, aluminum bars, and aluminum ingots.

(III) The non-ferrous metal mining and dressing industry

Xuancheng has six large-scale non-ferrous metal mining and dressing companies, with two copper mining and dressing companies in Xuanzhou District, one copper mining and dressing company in Jing County; one aluminum and tungsten mining and dressing company in Jing County, and two aluminum and tungsten mining and dressing companies in Jixi. In 2008, the total copper ore mining yield was 1,604 tons and the aluminum and tungsten mining yield was small. Currently, the city does not have any copper, aluminum, and tungsten smelting companies.

(IV) Major existing problems

In recent years, Xuancheng City has been actively looking for development opportunities and brought in and built up a number of non-ferrous metal processing companies, and the city's non-ferrous metal processing industry has begun to take shape. We have promoted industrial economy development and strengthened the economy. However, serious problems and challenges still remain in the city's non- ferrous metal processing and mining industry.

First, processing companies are small. In 2008, the city had 15 copper processing companies, with a total production capacity of 500,000 tons and an average production capacity of only 33,300 tons. Even the few big companies, such as Langxi Jinrun Copper, Xuancheng Baolong Copper, and Langxi Xinhui Electric, have only a production capacity of 80,000 tons per year. The biggest aluminum processing company, Shengxin Aluminum, has only a production capacity of 30,000 tons per year.

Second, technologies and equipment are outdated. There is little advanced technology while equipment and commonplace technology and equipment are everywhere. A lot of the equipment and technology is high in energy consumption and high in pollution. This problem is especially obvious in the copper processing industry, in which smelters are mostly 10 to 20 cubic meters, with a low continuous-casting ratio. Our technology and equipment are still significantly below the national advanced level.

Third, the product structure is simplistic. Most products are low in technology and roughly processed. Highly processed products, finely processed products, and high added-value products are few, and there is a lack of product diversity. Copper products are mainly bright low oxygen copper rods, and soft bare copper wire and aluminum products are commonplace types of materials.

Fourth, non-ferrous metal exploitation and mining efforts are insufficient. Even though we have large copper, aluminum, and tungsten reserves and some mining companies, we do not have a post-mining industrial chain that runs through ore processing and comprehensive utilization.

II. The Non-ferrous Metals Development Environment

During the periods of the "11th Five-Year Program" and "12th Five-Year Program," Xuancheng's non-ferrous metals industry was provided with important opportunities.

(I) There are national policies that are favorable to non-ferrous metals industry development

After the issuance of the national Non-ferrous Metals Industry Adjustment and Revitalization Plan, the province sent out the Non-ferrous Metals Industry Adjustment and Revitalization Plan, in which Xuancheng is listed as the provincial scrap copper industry base. This will greatly promote development of the city's non-ferrous metals industry.

(II) Domestic market demand is driving non-ferrous metals industry development

In 2008, national copper production reached 7.4859 million tons, for a comparative increase of 19.05 percent. National total copper consumption reached 7.9033 million tons, and became the biggest copper market in the world. In 2008, national aluminum production reached nearly14.274 million tons, for a comparative increase of 21.4 percent. China continues to be the largest aluminum producer in the world. With the rapid growth of the national economy, non-ferrous metal market demand will continue to rise.

(III) Rapidly developing technologies are providing substantial support for non-ferrous metal industry upgrading

As of right now, China has researched, trial-produced, and produced 250 copper brands, 2,000 copper varieties, and nearly 10,000 copper types. The pure copper to copper alloy ratio is six to four, and the varieties of copper are: 17.6 percent in sheets, 11.64 percent in tubes, 15 percent in rods, 27.35 percent in wire, and 1.28 percent in foil. Copper products are widely used in electrical power and electronics (60 percent), construction (15 percent), home appliance manufacturing (10 percent), industrial machinery manufacturing (5 percent), and transportation (4.5 percent). Copper consumption is rising rapidly in the electronics industry, the appliance industry, the automobile industry, and the construction industry. Sheet aluminum for cans and high-end aluminum foil is approaching an advanced international standard. Researchers have achieved great success in huge-diameter, thin-tube aluminum for high speed train bodies and have expanded aluminum alloy usage for railways, highways, automobiles, and airplanes.

III. Guiding Ideology, Basic Principles, and Goals

(I) Guiding ideology

By thoroughly applying the scientific development concept, we need to meet the overall requirements of maintaining growth, expanding domestic demand, and adjusting structures. Adopt comprehensive measures and stabilize and expand domestic market. Emphasize and strengthen technological transformation and innovation, eliminate outdated production capacity, and promote company reorganization. Promote product structure adjustment and upgrading for the non-ferrous metals industry. Fully utilize global and domestic resources in two ways. The first is paying special attention to recycling and reuse and vigorously promoting the development of a circular economy. The other is planning out and increasing mining and deep processing of copper, aluminum and tungsten, increasing resource security, and promoting sustainable development in the non-ferrous metal industry.

(II) Basic principles

1. Integrate coping with crisis and revitalization of the industry. [We shall] focus on solving problems in the non-ferrous metals industry, protecting major companies and major products, and promoting the smooth development of the industry. Meanwhile, actively take advantage of various favorable factors, establish market-oriented mechanisms, implement industry revitalization plans, accelerate industrial structure adjustment, and improve industrial competency.

2. Optimize layout and increase volume. According to the situational factors such as energy, resources, the environment, and the market, optimize the industrial structure. [We shall] support Langxi County and related regions to develop copper deep processing and support Xuancheng and related regions to develop aluminum processing. [We shall] promote industry centralization and company reorganization, increase the size of the industry, with a focus on copper, aluminum, and tungsten mining expansion in Jixi County and Jing County, encourage and guide companies to increase investment in deep processing of aluminum, tungsten, and other rare metal ores.

3. Promote technical transformation and eliminate outdated production capacity. [We shall] guide companies to speed up introduction of advanced technologies and equipment, actively conduct technological transformation by adopting advanced and suitable technologies, improving technologies and equipment, increasing product diversity, increasing product quality, and reducing consumption of energy and resources.

4. Promote company reorganization and attract investment. [We shall] strengthen system innovation, remove obstacles to company reorganization, and promote non-ferrous metals processing companies to form conglomerates and reorganize across regions and sections. [We shall] strengthen investment, with a main focus on promoting non-ferrous metals processing companies with high added-value products and advanced technology and equipment, promote industrial structure upgrading, bring in a set of manufacturing companies related to the non- ferrous metals industry, and promote extension of the non-ferrous metals industrial chain.

(III) Adjustment and revitalization goals

By 2011:

1. Capacity goals. The average annual sales revenue of Xuancheng's large non-ferrous metals mining and dressing companies should increase by 17 percent and the average annual sales revenue of large non-ferrous metals enterprises should increase by 20 percent. We shall achieve a copper ore mining yield of 1,900 tons, aluminum and tungsten ore mining yields of 1,200,000 tons, copper processing production of 450,000 tons, and aluminum production of 100,000 tons.

2. Technological advancement goals. [We shall] focus on major companies like Jinrun Copper, Shengxin Aluminum, and Baolong Copper to use technological transformation and innovation to achieve the national advanced level in technology and equipment, achieve product diversity and increased added-value, and reach top level national technological and economic standards.

3. Product structure goals. [We shall] vigorously promote development of strong, high- conductivity, and high-performance copper alloy materials, such as high-precision copper strips for lead frames, strong, high-conductivity copper alloy wire, copper-based powder material, green alloy bar/wire/ tube material, rare metals, and other key high-added-value key products with longer industrial chains and high vitality. In aluminum products, the focus should be on high-end colored aluminum, cast aluminum alloy auto parts, high-end electronic aluminum foil, and large-diameter thin tubing. By 2011, high added-value, highly-processed copper products should account for over 50 percent of all copper processing industry products and high-end aluminum, and cast aluminum alloy should account for over 50 percent of all aluminum processing industry products.

IV. Regional Layout

[We shall] optimize resource allocation, reduce social costs, protect the environment, and improve social benefit and company economic benefit. [We shall] coordinate regional development, continuously promote both overall development and focused breakthroughs, and fully take advantage of existing favorable conditions. [We shall] arrange production capacity according to market demand, industrial upgrading, and industry centralization to create a circular economy and extend industrial chains. [We shall] encourage companies to promote themselves according to their potential. With a focus on the provincial capital economic zone and the Huanjiang city belt, [we shall] vigorously promote county economies, speed up the construction of development zones and industrial parks, and make Xuancheng into a high-quality non-ferrous metals riverside processing base.

(I) The copper processing industry

With a focus on Langxi County, set up high-standard industry parks in the Langxi economic development zone and the town of Xinfa for copper recycling companies and copper processing companies. Within three to five years, construct a circular economy park with optimal infrastructure, a complete set of services, and an excellent investment environment. [We shall] encourage upstream and downstream companies to gather around the park to form a sectional economy that will bring substantial advantages. [We shall] also construct a major scrap copper processing and copper supplying base in the River Delta. Meanwhile, we should promote technological transformation and innovation for certain copper processing companies, including Baolong Copper in Xuancheng, Xinchang Electrical materials in Guangde County, Wanquan Copper in Jixi County, Guotai Copper in Xuancheng, and Yitong Copper in Jing County. [We shall] push these companies to improve their equipment and technology, develop new products, extend their industrial chains, and increase product added-value.

(II) The aluminum processing industry

[We shall] encourage companies like Shengxin Aluminum, Dongwei Aluminum, Hongyu Aluminum, and Zhongding Precision to promote technical transformation and innovation, increase production capacity, and develop new products. While expanding their capabilities, they should also adjust product structures to produce high-end colored aluminum, cast aluminum alloy auto parts, high-end electric aluminum foil, and large diameter thin tubing. [We shall] leverage Anhui Wantai Aluminum in Guangde County to construct a scrap aluminum processing base with an annual production capacity of 50,000 tons in order to secure supplies for the aluminum industry.

(III) The non-ferrous metals mining and dressing industry

In proportion to the confirmed volumes of various non-ferrous metal reserves, expand the scope of restructuring of the non-ferrous metal mining industry, with a priority on copper, aluminum, and tungsten mining development. [We shall] utilize companies like Xuancheng Jinxin Mining and Xuancheng Huatong Mining as focal points in the aluminum mining industry, and companies like the Jixi County Tungsten Company as focal points in the tungsten mining industry. With the right conditions and support from national policies, we should take on copper, aluminum, and tungsten mining projects step-by-step, take full advantage of our rich reserves of non-ferrous metals, expend industrial chains, and promote related manufacturing industries.

V. Policies and Measures

(I) Strengthen organizational leadership. [We shall] establish an adjustment and revitalization plan implementation leading group. Each step are kept in line with the top-level plan, major non-ferrous metal industry projects must be gradually promoted, relevant policies and measures must be coordinated, and major emerging problems in the course of implementation must be solved quickly. [We shall] promote healthy, harmonized, rapid development of the industry and strive to make Xuancheng City a major provincial non-ferrous metal industry base.

(II) Strengthen financial support. [We shall] encourage and guide financial institutions to increase the amount of investment in companies that follow industry policies and meet environmental requirements. [We shall] offer priority support to companies undergoing mergers and acquisitions, reorganizations, and major technological transformations projects in terms of business loans and bond issuance.

(III) Strengthen support for technological transformation. [We shall] encourage companies to undertake technological transformation and bring in advanced domestic or foreign equipment, technologies, and processes. [We shall] encourage companies to increase production capacity, increase technological innovation, develop new products, adjust product structures, and enhance the overall strength of the copper processing industry.

(IV) Increase the effort put towards eliminating outdated production capacity. First, gradually eliminate companies with outdated production and companies that are failing to meet environmental requirements in order to achieve energy conservation and environmental protection and to make space for advanced production companies. Second, prohibit introduction of new companies with outdated technologies and equipment in the copper processing industry, as well as in the copper, aluminum, and tungsten smelting industries, and avoid low-level, redundant construction.

(V) Implement human resource policies. [We shall] create a good atmosphere and mechanisms for outstanding entrepreneurs to show themselves. Emphasis is put on training high-level talented personnel with inter-disciplinary and creative skills. Close attention is paid to these three steps: fostering talented personnel, attracting talented personnel, and putting talented personnel to proper use. [We shall] establish a pool of technologically skilled personnel for Xuancheng's non-ferrous metals industry and strive to provide the brain power for sustained, rapid, and healthy growth of the non-ferrous metals industry.

VI. Plan Implementation

Relevant city government departments and county, town, and district governments shall share the work required to implement the Plan. They should communicate and coordinate with each other, quickly develop and perfect each policy and measure, set up a system for departments to release information jointly, and regularly publish information concerning non-ferrous metals industry to the community.

Relevant county, city, and district governments shall follow the goals, tasks, policies, and measures of the Plan. With consideration for actual regional situations, they are to quickly develop specific implementation plans and ensure that there are substantive effects.

Appendix 1: Partial list of non-ferrous metals industry adjustment and revitalization projects

Unit: 10,000 RMB Index Company Name Project Name Total No. Investment 6 total 66,000 1 Langxi County Jinrun Increase production of superfine wire 10,000 15,000 Copper tons 2 Jixi County Wanquan Copper production line technical 16,000 Copper transformation with an annual capacity of 100,000 tons 3 Anhui Shengxin Aluminum Annual aluminum alloy capacity of 60,000 15,000 tons 4 Xuancheng City Guotai Annual bright copper rod capacity of 20,000 4,000 Copper tons 5 Anhui Shenbang Energy Annual aluminum alloy door and window 16,000 Saving Doors and Windows capacity of 250,000 square meters

Appendix 2: Relevant departments share duties list

Index Duty Leading Department Participants No. 1 Enhance financial The People's Bank, Xuancheng Development and Reform support Xuancheng central Commission; Xuancheng Economy and branch; Xuancheng Information Commission; relevant financial Bureau of Finance institutions; guarantee institutions; etc.

2 Increase investment in Xuancheng Xuancheng Bureau of Finance; Xuancheng technological Economy and Development and Reform Commission; advancement and Information Xuancheng Technology Bureau; transformation Commission Xuancheng National Taxation Bureau; Xuancheng Local Taxation Bureau; relevant financial institutions; guarantee institutions; etc..

3 Scrap copper Xuancheng Xuancheng Economy and Information disassembling base and Development and Commission; Xuanzhou district copper processing Reform Commission governments; Langxi County government; industrial park Guangde County government; Jing County construction government; Jixi County government; etc.. 4 Establish mechanisms Xuancheng Bureau Xuancheng Development and Reform for elimination of of Finance Commission; Xuancheng Economy and outdated production Information Commission; Xuancheng capacity Bureau of Land and Resources; Xuancheng Environmental Protection Bureau; Xuancheng Bureau of Human Resources and Social Security; etc. 5 Achieve coordinated Xuancheng Xuancheng Economy and Information development of the non- Development and Commission; Xuancheng Bureau of Civil ferrous metals Reform Commission Affairs; Xuancheng Bureau of Commerce; processing industry and Xuancheng Bureau of Finance; Xuancheng related industries Bureau of Industry and Commerce; etc. 6 Expand the scale of non- Xuancheng Xuancheng Bureau of Land and Resources; ferrous metals mining Development and Xuancheng Economy and Information industry reorganization Reform Commission Commission; Xuancheng Bureau of Finance; Xuancheng Bureau of Industry and Commerce; etc.