In China Keyuan Petrochemicals has entered into land use right transfer agreements with the local government of Ningbo, paving the way for the construction of a storage facility, a raw material pre-treatment facility and an asphalt production facility as originally planned.
The Ningbo-based petrochemical manufacturer also acquired four parcels of land adjacent to the company's current facilities totalling approximately 1.2 million square feet. The total cost of the land was approximately $5.8 million (4.56 million), lower than the company's original $20 million projection.
Once completed, the new facilities will add an additional 100,000 tonnes of petrochemical storage capacity, a raw materials pre-treatment plant, 300,000 tonnes of asphalt production capacity, and 70,000 tonnes of styrene-butadiene-styrene production capacity, commonly used in soles of shoes, tyre treads and other products that require a hard rubber to remain sturdy for a long time.
The company expects the SBS facility and the storage capacity expansion to be completed in the second half of 2011; and the raw materials pre-treatment and asphalt production facilities to be completed in the first half of 2012.
The total build-out of the storage, pre-treatment and asphalt facilities will be approximately $70 million, including $20 million for facility construction, $40 million for new equipment, and $10 million for working capital.
Management expects that these three projects together will increase sales by as much as $298 million and net income by approximately $30 million a year.