THE PRICE COMPOSITION & RISING FACTORS OF TUGNSTEN CHINA, 2017
PART II OF X
Cost Composition & Price Trend of Tungsten Concentrate from the Perspective of Meso Economy
August 24, 2017
Yesterday, we mentioned that the current market price of tungsten concentrates of RMB 100,000 / standard ton (quoted by China Tungsten online market on August 22, 2017) only reflects the micro cost of tungsten concentrate. In fact, this is not only the highest price in the history of tungsten concentrate market, but also does not meet the cost of RMB 150,000 / standard ton of tungsten concentrate that should be calculated from the macro and strategic perspective of strategic materials.
We say this because it exceeds the cost of tungsten concentrate in the general accounting sense and the current actual cost of an enterprise or mine mining and smelting tungsten concentrate mentioned in the first part of this paper, that is, the cost of accounting statements based on raw material price + hydropower + personnel salary + tax + profit, which involves national politics, economy, labor force Such policy costs are factors beyond the control of enterprises, but sometimes have a significant impact. In fact, such factors are basically fixed and not controlled by production enterprises in a period of time. However, we also simplify the analysis as macro costs in this paper. This kind of institutional cost involves the impact of government, industry management, regulations and environmental protection systems on the price of tungsten concentrate. We also simplify the macro cost composition of tungsten products as follows:
Standard Ton: the standard generally refers to a metric ton with tungsten trioxide content of no less than 65% in the tungsten industry in China.
The First, the Exploration Cost of Tungsten Resources
The exploration ding of tungsten mines in China is not carried out by the main body of mine mining. According to China's current management system, the exploration right is obtained by the exploration department / enterprise. After exploring the mine resources, according to the exploration cost and mine resource status (i.e., reserves, storage conditions, ore yield, dilution rate, recovery rate, recovery rate, market price, development and utilization conditions, etc.) Factors are sold to mining development entities / enterprises in the form of exploration right transaction, so the basic cost of tungsten mining development enterprises is the transaction price of mining right, that is, the price of tungsten resources.
Tungsten Ore
Taking wolframite mines as an example, at present, the average recovery rate of domestic mining is 80% and the average recovery rate of beneficiation is 82%. Based on this calculation, according to the relevant national standards for tungsten concentrate (see the annex herein), the exploration cost of wolframite concentrate per standard ton is not calculated by dividing the price / cost of proved mining right by reserves, Instead, the average cost shall be calculated based on the actual available tungsten concentrate quantity obtained from 80% x82% of the proved reserves.
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