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In Joint Venture with China Guodian Corporation on Coal Mine Project in Heihe
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HONG KONG, May 30, 2013 - (ACN Newswire) - China Zenith Chemical Group Limited ("China Zenith" or the "Group", stock code: 362) announces that the Group plans to relocate its calcium carbide production facility in Mudanjiang, in southeastern Heilongjiang Province of China to Heihe, and subsequently sell and redevelop the vacant land in order to realise the intrinsic value of the land resource.
At present, China Zenith has six major production plants in Mudanjiang and Heihe occupying a total land area of 2,160,000 square meters. The Group is principally engaged in the production of chemical raw materials including polyvinyl chloride, vinyl acetate and calcium carbide supplied the construction and automobile industries in China. The relatively higher cost of electricity and other costs of raw material conversion in Mudanjiang as compared to Heihe have spurred the relocation in order to save operation costs.
China Zenith had previously announced that the Group is to set up a joint venture ("JV") with Heihe Border Economic Cooperation Zone Management Committee (the "HBECZ") for the development of coal mine projects. According to the framework agreement, the consideration will not be more than RMB650 million. The JV would be 49% owned by the Group and 51% owned by Heihe Coal Company Limited ("HCCL"). HCCL is an indirect wholly-owned subsidiary of China Guodian Corporation. After construction and development of the coal mine project, HCCL would develop and construct the power generation plants and the Group would develop and construct the coal-related chemical production facilities.
The coal mine is located in Xigangzi District within Heihe, Heilongjiang Province, conveniently accessible by developed railway and highway transportation. The coal mine has proven reserves of approximately 270 million tonnes and is about 200 meters beneath the ground surface. The average calorific value of the coal is around 4,000 cards and the annual output is estimated to be approximately 2.4 million tonnes of coal for the first phase and approximately 5 million tonnes of coal thereafter.
Ms Chan Yuk Foebe, Chairman and Chief Executive Officer of China Zenith, said, "We are pleased to cooperate with one of the five largest nationwide power generation corporations in the PRC, China Guodian Corporation, on coal mine projects with immense business potential. The Group believes that the operation of power generation plants with a plentiful stable supply of low cost coal will be highly profitable, while the calcium carbide business in Heihe will also benefit from stable electricity tariffs. Along with the convenient access to a comprehensive transportation network, our reduced production costs will also help enhance the competitive advantages in the vertical integration of the Group's coal-based chemical products laying a solid foundation for the Group's long-term development. With the relocation of the Mudanjiang facility to Heihe, the Group will opt for a more efficient matching of resources through the sale and redevelopment of the Mudanjiang land to create better returns to shareholders."
Contact:
Strategic Financial Relations Limited
Joanne Lam
Tel: (852) 2864 4816
joanne.lam@sprg.com.hk
Angela Ng
Tel: (852) 2864 4855
angela.ng@sprg.com.hk
Jovanni Cai
Tel: (852) 2114 4937
jovanni.cai@sprg.com.hk
Topic: Press release summary
Source: China Zenith
Sectors: Daily Finance, Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
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