April 27, 2004

China's Ronghua Industry Group's 50,000-Ton Lysine Project to Be Completed in 1st Half of 2004

An eFeedLink Exclusive Report

China's Gansu Ronghua Industry Group's original lactic acid production line has been changed to a 40,000-ton-per-year lysine production line. Due to the rising prices of raw materials (mainly steel products) and equipment costs, the amount to be invested has exceeded the original budget. The company is now striving to complete the remaining fund-raising for the project to be completed in the first half of 2004.   

With its original 10,000-ton lysine production line, the change of the lactic acid production line to an additional 40,000 ton of lysine, Gansu Ronghua Industry Group's annual production capacity of lysine will reach 50,000 tons per annum. This would undoubtedly give the company an edge in economies of scale and lower production costs.

The proposed change to build a 40,000 ton lysine production line is expected to cost investors RMB396 million. Upon realization of production capacity, it is expected to generate additional annual sales revenue of approximately RMB720 million, contributing additional after tax-profit of about RMB145 million. The invested amount is expected to be reaped in 3 years with average rate of return on investment at 36.62% per annum.

As at December 31, 2003, the 40,000-ton lysine production line has already exhausted RMB336.26 million in fund and the project reportedly 85% completed.