April 30, 2005

Gansu Ronghua's lysine projects delayed

In a recent announcement by Gansu Ronghua Industry Group on its annual performance, for year ending December 31, 2004, the company reported that investment on its new 10,000 tonne capacity lysine plant and another refurbish 40,000 tonne capacity lysine plant has reached 115 percent and 95 percent levels respectively.
 

In the annual report the company said that since the second half of 2003, Gansu Ronghua has focused on upgrading existing facilities to boost annual lysine output to 40,000 tonnes.  A total of RMB396 million was invested into this project, which was completed in the first half of 2004. As it were the same lysine product, work on the new and refurbish plants can be carried out concurrently.

However, the projects encountered some obstacles in April 2004, when Chinese banks moved to tighten credit facilities in accordance with the government's then macro-economic policies. With bank loan applications taking a longer time for approval, the projects were affected and commencement of production has to be delayed. 

In Q2 2004, the company's environment protection practices came under the scrutiny of the Environmental Protection Bureau. This resulted in the company having to mobilize manpower and financial resources into waste water treatment systems and this stalled the entire construction progress.

Since then the group has formulated a blueprint for waste-water treatment. With most of the investment money in place, production was expected to commence in the near future.