* Vital says bought inventory in conjunction with Kunming Rongke
* Little known Rongke had won five online Fanya auctions
* Fanya sell-off was a ‘very unique opportunity’ -Vital CEO
By Tom Daly
BEIJING, Jan 22 (Reuters) – Vital Materials Co, the world’s biggest minor metals producer, said it has bought several batches of inventory previously held by China’s Fanya Metal Exchange, including around five years’ global supply of indium, in online auctions.
Vital’s statement ends speculation as to the fate of some of the Fanya inventory after a company called Kunming Rongke New Materials was named on e-commerce platform Taobao as the winner of five of the auctions, the last ending on Jan. 18.
Kunming Rongke, the vehicle used to purchase the stocks, was only established in September 2019 and the lack of information on the company led some traders to wonder whether it had been created for the sole purpose of keeping hold of the inventory to avoid flooding minor metals markets with supply.
Kunming-based Fanya’s inventories have weighed on minor metals prices since the exchange collapsed amid liquidity problems in 2015. The inventory sell-off, which was handled by a court in Kunming, in southwest China, began in early 2019.
Kunming Rongke successfully bid a total of around 4.2 billion yuan ($609 million) for batches of germanium, gallium, selenium, bismuth and, most recently, 3,609.5 tonnes of indium – a silvery metal used in flat-panel displays.
Vital said it had bought those batches “in conjunction with Kunming Rongke” and now owned all of the material. It also splashed out 51.95 million yuan on tellurium, although on that occasion Vital itself was named as the winning bidder.
The Fanya sell-off was “a very unique opportunity for both Vital and the industry, with the stocks serving as a ‘surface mine’,” George Zhu, president and chief executive of Guangzhou-based Vital, said in the statement.
The stocks “will enable Vital to provide more stability and visibility” for customers as the company works on new applications for the metals such as 5G and facial recognition technology, he added.
Vital’s chief investment officer Sean Fuller told Reuters some of the material was “already on its way” to the company.
“The fear that the Fanya stocks might flood into the market and destroy the already very delicate balance of supply and demand has been overhanging onto the market,” said Vicky Zeng, Vital’s global vice president for sourcing.
“Now with all these metals being moved to Vital, people can be relieved as all the metals will be consumed and leveraged internally with our extended value chain.” ($1 = 6.8988 Chinese yuan renminbi) (Reporting by Tom Daly; Editing by Susan Fenton)