September 26, 2011

 

China's Dacheng to expand lysine operation in Russia

 

 

China's Dacheng Industry Group, the parent of Global Bio-Chem, said it would build a lysine production plant in Russia as part of its expansion plan to counter persistent corn shortages at home.

 

The company will invest between RMB1-1.5 billion (US$156-235 million) to set up a plant in Russia to produce lysine using local grains, said deputy general manager Zheng Guichen during a corn conference in Changchun, where the company's production facilities are based.

 

Dacheng, Asia's largest corn processor, together with other major domestic players, have been ordered to halt corn purchases temporarily early in the year in order to make way for state purchases to replenish government reserves.

 

The restriction is particularly strict this year as the government is also facing the lowest stocks in years and domestic corn prices have hit record levels, which has driven up food prices, the major driver behind the country's overall inflation.

 

"The corn supply is turning tighter, which is in addition to stricter restrictions by the government. Raw material supplies are now the bottleneck on our way toward further development," said Zheng.

 

Since 2007, Beijing has restricted expansion plans by the corn processing industry amid concerns that China would not be able to meet rising demand from animal feed sector.

 

Corn is the major raw material of animal feed. The grain can also be processed into starch and alcohol and further to starch sugars in making glucose and syrup as well as lysine and citric acid.

 

Dacheng processes 3.6 million tonnes of corn into downstream products, including starch and amino acids, polyol chemcials as well as corn sweeteners.

 

The tighter controls this year have sparked complaints by alcohol makers during a corn conference in Changchun, capital of Jilin province, the country's largest corn area.

 

Lu Xianchen, chairman of Jilin Xin Tianlong Alcohol Co Ltd, said Beijing's restriction has doomed its plan to list at domestic bourses in order to raise capital for further expansion.

 

Dacheng is currently working with Novozymes, the world's leading enzyme maker, to make plastics from corn stover.