EXCLUSIVE: Vital Materials confirms buying Fanya minor metals stocks

Minor metals producer Vital Materials purchased the minor metals stocks of indium, bismuth, germanium and selenium that had been held on the now defunct Fanya Metal Exchange, the company has confirmed to Fastmarkets.

Chinese company Kunming Rongke was initially named as the buyer of the aforementioned minor metals in auctions over several months since last year. This company was only established in China in September 2019. Vital has now confirmed it purchased the material through Kunming Rongke according to its "procedure for the completion of the sale" and 100% of the material belongs to Vital. 
Vital acquired the following volumes of material between October 2019 and January 2020 through Kunming Rongke:
- 3,629.46 tonnes of indium
- 19,228.05 tonnes of bismuth
- 92.31 tonnes of germanium
- 191.25 tonnes of gallium
- 337.8 tonnes of selenium
Vital also bought 170 tonnes of tellurium under its own name.
The majority of material will be consumed internally, helping to expand its long-term strategy to expand its downstream product lines, Vital told Fastmarkets exclusively on Tuesday January 21.
“With all the [Fanya stocks] being moved to Vital, people can be relieved as all the metals will be consumed and leveraged internally with our extended value chain,” Vital global vice president of sourcing Vicky Zeng said.
“The Fanya stock is a very unique opportunity for both Vital and the industry, with the stocks serving as a ‘surface mine’, Vital, with its established infrastructure and extended value chain, will be able to serve its customers better by providing an effective closed-loop solution, especially on new high-tech applications such as 5G and facial recognition,” Vital president and chief executive George Zhu told Fastmarkets.
“For the key account customers, the stocks will enable Vital to provide more stability and visibility while supplying for their need, which is crucial for them to manage their risks and business development in the long run,” he added.
"Acquiring this surface mine of rare metals will allow us to continue consolidating and investing in our four business units for years to come.” Vital chief investment officer Sean Fuller said. 
Vital Materials, one of the largest and most diverse minor metals producers in China, employing more than 4,000 people worldwide, has eight sites across the country: four in Qingyuan, a pigment plant in Tianjin, a Thinfilm plant in Hefei, a semi-conductor plant in Chongqing, a smelter plant in Hunan, as well as several production sites overseas.
Vital can take in almost any minor metal-bearing material between its sites and produces around 160 products and advanced added value components, ranging from selenium powder to metalorganic compounds, speciality gases, targets and lenses, Zhu told Fastmarkets in an earlier interview.
The Fanya Metal Exchange was initially a boon to China’s domestic market when it was launched in 2011, providing another outlet for producers to sell their materials and giving a group of new investors the opportunity to step into what is considered a complicated market.
But problems began to emerge at the end of 2014 when some investors started to become wary over metal stock continuing to pile up due to new production coming on to feed demand for the exchange’s products. With sentiment souring, the exchange found itself exposed to continually falling prices for metals, while also being accused of failing to pay suppliers.
The local government said that about 70,000 tonnes of 14 different kinds of non-ferrous metals had been seized by Yunnan police.
This included about 3,629 tonnes of indium - equivalent to six years’ worth of global consumption - and enough bismuth to feed more than a year’s demand for the metal, as well as significant volumes of selenium.

Ewa Manthey

ewa.manthey@fastmarkets.com

Cristina Belda

cristina.belda@fastmarkets.com

Published

Ewa Manthey

Cristina Belda

January 21, 2020

15:40 GMT

London