SILICON METAL IN CHINA :

1

• SILICON METAL IN CHINA
• VIEWS AND ANALYSIS FROM
• A WESTERN PRODUCER
• Thierry Alary - INVENSIL
• Hong Kong - May 30, 2002

2
INVENSIL KEY FIGURES

• A PECHINEY GROUP COMPANY
• N2 SILICON PRODUCER IN THE WORLD
• CAPACITY 150000 Tons
• PRODUCTION 131000 Tons (2001)
• TURNOVER 175 M (2001)
• EMPLOYEES 802

3
INVENSIL KEY CHARACTERISITICS

• FIVE INDUSTRIAL SITES
• FOUR PLANTS IN FRANCE / ONE IN SOUTH AFRICA
• 11 FURNACES ( 220 MW )
• ADVANCED TECHNOLOGY
• FURNACE
• ELECTRODES
• REFINING
• ISO CERTIFICATIONS
• QUALITY (ISO 9001)/ ENVIRONMENT (ISO 14001)
• N2 WORLD PRODUCER OF SILICA FUME
• MEMBER OF EUROALLIAGES

4
CHINESE SILICON METAL INDUSTRY

• UNCONTROLLED DEVELOPMENT
• INSUFFICIENT MARKET FOCUS
• LOSS MAKING INDUSTRY
• LACK OF ORGANIZATION

5
UNCONTROLLED DEVELOPMENT

• GROWTH RATE HIGHER THAN WORLD AND DOMESTIC
  DEMANDS
• NO MARKET RATIONALE BEHIND LOCAL GREENFIELD
  PROJECTS
• TOO MANY NEW PLAYERS/COMERS INTO SILICON
  PRODUCTION

OVERCAPACITY
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INSUFFICIENT MARKET FOCUS

• SLOWLY EMERGING INTERNAL DEMAND
•  WANTED EXPORT MARKET 
• NEW CAPACITY UNRELATED TO MARKET DYNAMICS
• IMAGINARY EXPORT MARKET
• LOCAL IE CORPORATIONS POWER
• GAMBLE OF FOREIGN CUSTOMERS

WEAK MARKETING
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LOSS MAKING INDUSTRY

• DAMAGING OVERCAPACITY
• PRODUCTION COST ABOVE EXPORT PRICE
• BAD FINANCIAL SITUATION OF SILICON PRODUCERS

CHANGES ARE COMPULSORY
8
LACK OF ORGANIZATION

• NO LEADING PRODUCER EMERGING
• LACK OF A PRODUCER ASSOCIATION
• NO LEADING EXPORT ORGANIZATION

ENCOURAGE PRODUCER CONTROL
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CHALLENGES FOR CHINESE SILICON INDUSTRY

• DOES FAST DEVELOPMENT MEAN NO LONG- TERM
  PROFITABILITY ?
• HOW TO ENSURE THAT FAVORABLE COST FACTORS
  GUARANTEE PROFITABLE
• REVENUE ?

10
STRATEGIES FOR CHINESE SILICON METAL INDUSTRY

• ORGANIZE
• CONCENTRATE
• RATIONALIZE
• KEEP FULL CONTROL
• RENOUNCE TO UNFAIR COMMERCIAL AND INDUSTRIAL
  PRACTICES

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CONCLUSION

• CHINESE SILICON METAL INDUSTRY NEEDS TO PROMPTLY
  RESTRUCTURE
• SILICON IS POTENTIALLY A PROFITABLE INDUSTRY
• FOREIGN ASSISTANCE MAY CONTRIBUTE TO THE
  MODERNIZATION OF THE INDUSTRY