China GengSheng Minerals, www.gengsheng.com – one of China’s top producers of a wide array of advanced industrial materials and highly customized solutions, primarily serving the iron and steel industries with components for high-temperature vessels and the like, reported singing of a definitive agreement with a local Gongyi, Henan Province affiliate today for the production of some 30k metric tons of the Company’s fracture proppants through to the end of the year.
This deal boosts the total annual output of fracture proppants a solid 20%, offering prime incentive for the Company to move production to a new site and so the Company has subsequently terminated its lease on the existing facility in Gongyi.
This is also in accordance with the local government’s own initiatives to improve life for the people of Gongyi, as the leased facility is in an area impacted by the government’s development plans and is essentially unsuitable for the kind of large-scale production with which CHGS is now tasked. The Company has been able to circumvent any penalties/liabilities associated with the lease due to the nature of its termination.
Chairman and CEO of CHGS, Shunqing Zhang, cited skyrocketing global drilling activity as a prime mover of the Company’s fracture proppant trade and noted that both domestic and international customers have been eager for bigger numbers.
With $14.3M in orders for last year and $15.9M already in the first quarter for 2011, CHGS isn’t shy about taking the hint and is looking to further increase production this year in order to keep up pace with global markets.
Current evaluation of strategic opportunities for construction/acquisition of additional capacity is underway and confidence is high that this growth market has the potential for generating significantly higher revenue and margins for CHGS.
A 25-year trusted veteran producer of materials integral to the safe/efficient production of steel and iron, CHGS has seen the trends within the industry come and go, this attitude is a clear arrow to bundle in with others when analyzing the overall curve. The company stands to rake in some serious profits for shareholders as the primary drivers behind their business, like drilling and industrial metals production, see massive global increases.