Marketing the Chinese Materials

Eric H. Williams

Purchasing Manager

North American Minerals

905 48^th Avenue

New York, N.Y. 10159

Tel:(212) 490-2456

Email: Ericw@yahoo.com

Date: September 30,2001

Ma Jun

Marketing Materials

Young’s Refectory Materials Inc.

No.1, Men’s Avenue, Zhongshan District

Dalian, Liaoning Province

Tel:0411-286-5151

Email:Youngl@youngrm.com

Re: Marketing the Chinese Materials

Dear Ma Jun,

Thanks for the figures, which are informative in your email on Sept. 29,2001. You’re maybe right on the trend that the refractory car is heading for, however, by far the car in on the highway and ro paddle the gas.

Principally because of the unexpected relative hardness of the magnesite and the erratic lack of uniformity from one shipment to the another, the incorporation of Chinese bauxite into the conservative and cautious refractory operations of the world has been a slow process. Compounding the problem has been the delayed awareness by refractory manufacturers that in China one is not working with a single uniform Guyana-type bauxite, but with literally dozes of refractory grade bauxite. With five principal producing provinces in China, each of the three major ones of Guizhou, Henan, and Liaoning could have as many as ten calcining centers, each having a raw bauxite frequently showing significant differences in chemical and physical characteristics. While the huge reserves of crude bauxite and magnesite in China are essentially all good quality , some are better than others.

Complicating the supply and quality aspect to a greater and possibly more confusing degree is the calcining operation of the bauxite. Traditional rudimentary natural draft shaft kilns produce the bulk of the Chinese refractory grade bauxite. These shaft kilns frequently have few combustion controls and are coal-fire, in alternating layers, with the 6-8’ lump bauxite. Effective temperature controls are generally non-existent. In other operations, “round kilns” which are actually old-style batch “beehive” periodic refractory kilns, receive feed bauxite of up to 30-inch sized-lump instead of having refractory brick loaded in and out of the kilns by hand. Uniform density, which is required by the refractory users, could be a question here.

Congesting and transporting magnesite in Dalian and Bayuquan harness the development of the magnesite trade between China and the US. I have tride several times via an agent in New York here to bring some Dead-Burned Magnesite and Calcined Magnesite by bag, it seems the outcome failed my endusers’ expectation.

Now you probably understand that we have to have the outsourcing through the traditional resources and we don’t have a need for your materials so far unless you have to remove the obstacles before we move on. First you have to have the uniform quality of the bauxite; second, you have to solve the loading problems in Dalian and Bayuquan; third, you have to offer the competitive price.

Yours faithfully,

Eric H. Williams

Purchasing Manager