Building Materials

 1. Introduction to the Project

1.1 Project Background

1.1.1 Product Introduction

Diatomaceous earth is a kind of siliceous rock, also a biogenic siliceous sedimentary rock, which is mainly composed of the remains of ancient diatoms. Its main chemical composition includes SiO2, representing with SiO2·nH2O and its mineral composition is the opal and its variants. The color of diatomaceous earth depends on the clay minerals and organic matter, and its composition with different mineral source is different. The project is to use the characteristics of diatomaceous earth to produce pharmaceutical preparations.

1.1.2 Market Overview

(1) Development Status of Diatomaceous Earth Industry in China

According to the relevant data show that China's diatomaceous earth reserve reaches 110 million tons and China's diatomaceous earth resources exceed 2 billion tons. Resource distribution is relatively concentrated, mainly in Jilin, Yunnan, Zhejiang and other places, among which Linjiang, Changbai, Jilin Province has the largest high-quality diatomaceous earth reserve, accounting for more than half of the country. The following is relatively Yunnan, Fujian, Zhejiang and other places.

China's diatomaceous earth production has shown a steady trend, without fluctuations. From 1999 to 2014, Between the highest point of production and the lowest point of production only differs 90,000 tons. By 2010, the most significant fluctuation occurred that the production from 440,000 tons in 2009 fell to 400,000 tons, decreasing by 9%. In 2014, China's diatomaceous earth production was 430,000 tons, accounting for 18.2% of the world's total.

The diatomaceous earth produced by our country is mainly used for domestic consumption, a small amount of them for export. And China also imports a small amount of high value-added diatomaceous earth every year. Overall, China's diatomaceous earth production shows a steady upward trend. Due to China's efforts to increase mineral resources protection, China's diatomaceous earth export amount is decreasing year by year, import amount remaining stable. With the development of China's economy and urbanization process, China's diatomaceous earth resource demand is increasing. From 1994 to 2014, the apparent consumption of diatomaceous earth in China has increased year by year. In 2014, diatomaceous earth production amount was 430,000 tons; the import volume 10231.64 tons; the export volume 4294.4 tons; the apparent consumption amount 434,900 tons.

(2) Prospect Forecast of Diatomaceous Earth Pharmaceutical Preparation

Diatomaceous earth is China's important non-metallic mineral. At present, Diatomaceous earth reserve and production is the world's second largest diatomaceous earth market, only following the United States At present, with the increase of environmental pressure in China, diatomaceous earth is attracting more and more attention as an emerging environmental protection material, which has a broad development prospect in the future. In addition, diatomaceous earth has been widely used in the pharmaceutical industry and is used as a silicon-containing active ingredient or excipient in pharmaceutical preparations. Compared with the traditional pharmaceutical, the target market of diatomaceous earth formulations in this project has more advantages in Jilin Province and even in three northeastern provinces. Diatomaceous earth pharmaceutical preparation can take advantage of the favorable diatomaceous earth in Linjiang, Baishan City, and also can drive the development of the local pharmaceutical industry, with prosperous market prospect.

 

1.1.3 Technical Analysis

The project is based on the mature technology and its patent number is CN201180026356.7.

1.1.4 Advantageous Conditions of Project Construction

(1) Policy advantage

“Thirteen Five”plan of Jilin Province has proposed that carry out the in-depth research and development and market development of carbon fiber, polyimide fiber and other high-performance fiber and composite materials, accelerate the development of new products, new grades, new technology of the special synthetic rubber, increase the development of special engineering plastics products, promote the development and application of environment-friendly polymer materials, develop the aluminum alloy, magnesium alloy, rare earth magnesium alloy, nickel alloy, high nitrogen alloy which have high-performances and promote multi-domain applications and deep processing of diatomaceous earth.

The twelfth five-year plan outline of Baishan City’s national economic and social development put forward to develop diatom nanometer micropores and other new energy-saving green materials based on diatomite resources. Focusing on the construction of Linjiang and Changbai Diatomite Industrial Park, do a good job in the rectification and integration of existing enterprises and mineral resources and introduce strategic investors to achieve large-scale operation, creating Asia's largest and world-class diatomite new material base. In Overall Development of Metallurgical Industry in City Planning, the development of new mineral materials is clearly listed as a key special project, which will gain strong support from enterprises in terms of its capital, land, taxation and other aspects.

 (2) Resource advantages

Diatomite resources reserve of Jilin Province ranks first in the country, about 51% of the national reserve. Baishan City is located in the southeast of Jilin Province. As of the end of 2010, diatomite reserve of Baishan City has been up to 290 million tons, accounting for 97.4% of the total amount of Jilin Province and 53.6% of the total amount of China, among which diatomite resources owned by Changbai County and Linjiang City have accounted for about 98.2% of the total amount of Baishan City.

Linjiang City is rich in natural resources and wild animal and plant resources, known as “three-dimensional resource treasure house”. The mineral resources include 46 species such as iron, coal, gold, diatomaceous earth in the territory. Among them, proven diatomaceous earth reserve exceeds 200 million, ranking first in the country, which is awarded the “China Diatomaceous Earth Industrial City” and “China Diatomite Diatomaceous Earth Industry Technology Demonstration Base” by China Non-metallic Mineral Industry Association.

Linjiang Diatomaceous Earth Industrial Concentration Area is located in the two ditch valley of northeast of Liudaogou of Linjiang City, an area of 1.9 square kilometers, planning area of 12 square kilometers.

 (3) Location advantage

Located in the core area of tourism market in Northeast Asia, at the edge of Russia, Japan and Korea, which have the largest tourist sources of China's inbound tourism and with the trend of North Korea's reform and opening up becoming increasingly apparent, Baishan city is faced with the potential advantages of rapid development of tourism and trade exchanges in the future. Baishan City is located in the Central Changbai Mountain tourism economic circle and Shenyang, Changchun Three-hour economic circle. Since Changbai Mountain Airport is opened, Shenyang, Dalian, Tianjin, Qingdao and other routes have been opened, forming the three-dimensional transportation network with aviation, highways, railways been integrated, so Baishan City geographical advantage will be significantly improved.

Located in two important nodes of two sea outfalls―Tumen River and the Yalu River that are frontier areas, with the national key development and open experimental area and the construction of the border economic cooperation zone, Baishan City can fully play its role as the external window, with great potential to develop export-oriented economy.

During the “Thirteen Five-Year” period, Baishan City has insisted on deepening reform, expanding opening up, and actively building a new comprehensive and board pattern with focusing on in-depth reform and opening up, striving efforts to expand Baishan economic extroversion.

 (4) Industrial advantage

Baishan City will focus on building a new material industry park with the comprehensive utilization of diatomaceous earth as core. With the new building materials, environmental protection, ecological agriculture as the starting point, select several projects of mature technology and close to the market to plan. In the premise of grasping resources, scientific research and market, plan to build an Asia's largest new material industry incubator park with comprehensive utilization of diatomite as the core.

On December 13, 2006, Jilin Provincial People's Government approved to establish the Linjiang diatomaceous earth industrial concentration zone, located in two ditch valley of northeast of Liudaogou of Linjiang City, an area of 1.9 square kilometers, planning area of 12 square kilometers, proven reserves of 200 million tons, among which the first-level soil accounts for 30%, the second-class 35% and third-class 35%. In 2008, cooperation with Beijing Dadi Yuantong Group as strategic partners, 300 million yuan has been invested in the integration and efficient utilization for diatomaceous earth resources of Linjiang. In 2010, China Nonferrous Metals Industry Association awarded Linjiang City as “Chinese Diatomaceous Earth Industrial City” and “Chinese Diatomaceous Earth Industry Technology Demonstration Base”. As of March 2015, there are 3 diatomaceous earth provincial famous trademarks, 5 provincial brands and 3 provincial technology research and development centers. Main diatomaceous earth products that have been developed and produced include filter aid, functional filler, insulation materials, building materials, carrier materials, catalysts of six series of 35 varieties and138 kinds of specifications. Layout status of production is as follows: Liudaogou mining area, production area, Lincheng industrial production area, and most enterprises are concentrated in the vicinity of Liudaogou mine area.

At present, there are 28 enterprises that produce diatomaceous earth products with diatomaceous earth research as raw materials in Linjiang City, among which the enterprise with scale is more than 15, accounting for 23.8% of the total number of enterprises on the regulation in Linjiang City.

1.2 Content and Scale of Project Construction

1.2.1 Project Scale

The project planes to cover an area of 40,000 square meters. The solid pharmaceutical formulations developed by this project can be prepared into the form of drugs, including tablets, lozenges, capsules, granules, pellets or any other solid drug dosage forms. The annual output of pharmaceutical preparation as a calcium-increasing and cholesterol-lowering component reaches 1 million tablets, effervescent tablets and chewable tablets with diatomaceous earth as the filler of 2 million, capsules using diatomaceous earth as the filler of 3 million.

1.2.2 Construction Content

The project mainly builds comprehensive office buildings, workshops, research and development centers, dangerous goods bases, workstation for academicians, warehouses, power supply facilities, water supply facilities and packaging workshops.

1.3 Total Investment of the Project and Capital Raising

1.3.1 Total Investment of the Project

The total investment of the project is 200 million Yuan, including construction investment of 160 million Yuan.

Table 1: Summary Table of Total Investment of the Project     Unit: RMB10,000

No.

Expense Name

Amount of Investment

Proportion of Total Investment %

Remarks

1

Construction investment

16000

80

 

2

Interest incurred in construction period

 

 

 

3

Working capital

4000

20

 

 

Total investment of the project (1+2+3)

20000

100

 

1.3.2 Financing

Self-raised by the enterprise.

1.4 Financial Analysis and Social Evaluation

1.4.1 Main Financial Indexes

After the project reaches its output, the annual operation revenue is 230 million Yuan, and profit is 52.6 million Yuan. The payback period is 4.8 years (after taxes, including construction period of 1 year), and return on investment is 26%.

Table 2: List of Major Indexes for Forecast of Economic Benefits  Unit: RMB10,000

No.

Name

Unit

Index

Remarks

1

Sales income

RMB10,000/a

23000

Normal year

2

Total profit

RMB10,000/a

5260

Normal year

3

FIRR of all investments

%

22

After income tax

4

FNPV (Ic=10%)

RMB10,000

9370

After income tax

5

Period for recovery of all investments (after tax)

a

4.8

Including 1 year of construction period

6

Rate of return on investment

%

26

After income tax

Note: "RMB10,000" in the Table shall be RMB.

1.4.2 Social Evaluation

    After the project is put into production, it will promote the construction of the pharmaceutical industry and health demonstration area, greatly increase the employment opportunities of farmers, promote the rural economic development and fully use of the mature experience in the development of diatomaceous earth and professional and technical personnel, which is conducive to the rational use of diatomaceous earth resources of Linjiang, Baishan City, promote the agriculture and the pharmaceutical industry development together, filling the gaps in the market and promoting the development of other related industries, playing a good role in promoting the local economy and society, with good social benefits.

1.5 Cooperative Ways

Joint venture, cooperation, other methods can be discussed in person.

1.6 What to be Invested by Foreign Party

Capital, other methods can be discussed in person.

1.7 Construction Site of the Project

Diatomaceous Earth Industrial Concentration Area of Linjiang

1.8 The On-going Condition of Project

The cooperation proposal has been prepared.

2. Introduction to Partner

2.1 Basic Conditions

Name: Diatomaceous earth industrial concentration area

Legal address: Liudaogou Town, Linjiang City

2.2 Overview

Established on December 13, 2006 with the approval of the Jilin Provincial People's Government, the starting area of 1.9 square kilometers and the planned area of 12 square kilometers, Linjiang Diatomaceous Earth Industrial Concentration Zone is planned to be five functional zones, including industrial park, science and technology park, Logistics area, business district and life service area.

The institutions set up include Party and Government Offices, Economic Development Bureau, Financial Audit Bureau, Merchants Bureau, Forestry Water Conservancy and Environmental Protection Bureau; the accredited agencies include State Taxation Branch, Local Taxation Branch, Industry and Commerce Branch, Land Branch and Technical Supervision Branch, with manning quotas of 36. There are 200 million tons of current diatomaceous earth reserves in the region, ranking the first in Asia and being the world's first grade. There are 16 existing diatomaceous earth processing enterprises and 2 metal mining and processing enterprises, which have initially formed a characteristic industrial cluster. There are more than 30 species of developed diatomaceous earth products, which are exported to the Asia-Pacific, Europe, the United States and other countries and regions, among which filter aid products account for more than 85% of the domestic market, being the China's largest diatomaceous earth production and processing base. In 2007, the Linjiang Diatomaceous Earth Industrial Concentration Zone reached the regional GDP of 380 million yuan, industrial output value of 560 million yuan, industrial added value of 220 million yuan, tax revenue of 30 million yuan, capital investment in place of 164 million yuan, fixed assets investment of 541 million yuan.

Industrial development: create “China Diatomaceous Earth Industrial City: and construct China's largest diatomaceous fine earth and new materials production base, diatomaceous earth environmental functional materials production base, sewage treatment engineering raw material support base and small sewage treatment and drinking water purification plant production base, diatomaceous earth-related products distribution center, diatomaceous earth technology research, development, cooperation and exchange center and diatomaceous earth-related industrial projects incubator base.

2.3 Contact Method

Address: No. 208, Linjiang Street, Linjiang City

Postal Code: 134600

Contact Person of Project Unit: Zhang Yiquan

Tel: 0439—5212718

E-mail: ljzdxmb@163.com

 

Contact Person of Project City (Prefecture): Liu Caixiu

Tel: 0439-3594265    18629751799

Fax: 0439-3594778

E-mail: lcx9881@sina.com

Website of City (Prefecture): www.cbs.gov.cn

 

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