I. Project Background

1.1 Significance of the Project

Ever since the 19^th century, based on natural mineral resources, plant and petroleum and the development of production and science and technology especially the development of inorganic chemistry and organic chemistry, many new nonmetallic materials have been invented. Those new materials include cement, artificial graphite, porcelain, composite rubber, composite resin (plastic), and composite fiber etc. All these have developed fast for the expanding uses in modern industry due to their advantages in functions compared with natural resources.

In order to promote the implementation of economic stimulating policies and the revitalization of 10 major industries, Jilin Province made up boosting plan of 8 major industries and officially issued the “Planning Outline of Boosting Industries in Jilin Province” in 2008.

As described in the “Planning Outline, a rapid development of high level and new functional constructional material, nonmetallic nanometer material, metal and alloy material and high level functional fiber material should be realized. Industrialization, large scale production and Jilin new material production base should be created. The products involved in this project are in the scope of new material which is included in this “Planning Outline”.

Being one of the old industrial bases in Northeast China, Siping City has taken developing high-tech materials as one of its revitalization policies. This project will promote the development of upstream and down stream industries and set up an industrial chain focusing on polymer wear resistant matrix composite which lays profound influence on constructing the high-tech material base in Siping City. This will also greatly promote the revitalization of old industrial base of the City.

1.2 The necessity of the Project

    At present, all the domestic and international nonmetallic material companies take technology of wear resistant porcelain material as the major technology in the future. They have increased investment, made active plan and even started producing wear resistant porcelain in small quantity. As the biggest producer and consumer of metal material, China should make an active plan of this industry from strategic point of view and promote industrialization.

Now most of the cement, metal, electronic, petrochemical, aluminum, mine and coal producers in the world use steel pipes to transport their products. However, the steel pipes are with low wear resistant, low acid and base resistant and are easily get rusted. To change the broken steel pipes usually cause production suspensions. In order to extend the using time of the pipes, people usually stick porcelain or hard plastics patches on the inner walls of them. But due to the shortages of those materials, the lifetime of those pipes can only be extended by about several months and not more than one year. This will not only reduce the production efficiency but also pollute the products.

Due to the lack of core techniques and intellectual property, Chinese wear resistant porcelain producers are not as competitive as the international ones. Siping Pengfei Co., Ltd is trying to develop this project to acquire the relevant techniques about wear resistant material production and improve the competitiveness of the similar companies in China.

Now the technology of “polymer matrix composite wear resistant pipe and component” is in the early phase of industrialization and marketing. To develop this project is beneficial for the admission of the wear resistant technology and products from customers. To set up the industrial chain including “polymer matrix composite wear resistant pipe and component” industry is good for making the low profit and labor condense mode of the whole industrial chain on a higher level in the international value chain.

China does not fall behind in nonmetallic material research for many research institutes and universities and colleges including the 53^rd research institute of China Weapon Industry Corporation, Shandong Nonmetallic Material Research Institute, Inorganic Nonmetallic Material Research Institute of Shanghai Donghua University and Jilin University and so on. But because the industrialization has been moving too slowly while the research is developing fast, there is a gap between the two. This project will have an open research center so as to attract all the excellent experts which integrates production, study and research.

II. Construction Scale and Production Plan

2.1Capacity and Concept

1. Capacity

Produce 4 tons of polymer matrix composite wear resistant pipe and component each year.

2. Concept

The parameter of the pipes produced each year is Φ300~Φ3000mm. Components mentioned above mainly include elbow, connecting parts and special parts etc.

2.2 Main Constructions

1. Production Line

8 production lines will be built. Each of them has a capacity of 5000t/a and the total capacity reaches 40000t/a.

    2. Details of Constructions

The whole area covers 21370 m² among which the 6 pipe workshops cover 16000 m²; public sectors, offices and entrance guard room etc. cover 5370m². Final product warehouse and hardening area cover 21000m². All the pipes’ length in the plant (power supply, water supply and draining, heating) total 4500m. Walls’ length total 1500m and two gates. Please find details in the following table.

No.	Name	Unit	Quantity	Remark
1	Main Part	m²	16000	Accumulated area
1.1	Pipe Workshop	m²	16000
1.1.1	Pipe Workshop 1	m²	8000	2 sites, 2×4000m², bent construction, single floor, floor height is 11.5
1.1.2	Pipe Workshop 2	m²	8000	4 sites, 4×2000m², bent construction, single floor, floor height is 11.5
1.2	Assistant Facilities
1.2.1	Final Product Warehouse	m²	4000	2 sites, 2×2000 m², cement concrete
2	Pubic Facilities	m²	5050	Accumulated area
2.1	Substation	m²	500	Brickwork, single floor, floor height is 4.5m
2.2	Pump House	m²	50	Brickwork, single floor, floor height is 3.5m
2.3	General Administrative Area	m²	4000	Brickwork, four floors, floor height is 3.6 and 3.3 m. They are offices, dormitories, dining halls and inspection rooms.
2.4	Garage	m²	500	Brickwork, single floor, floor height is 4.5m
2.5	Information Engineering	set	1	Local network construction, office software purchasing, internal communication facilities (300)
2.6	Cistern	m³	360	Fire proof cistern is 260 m³ and daily use one is 100 m³
3	Construction of Plant	m²	320	Accumulated Area
3.1	Gardening Area (Road and Parking Lot)	m²	17000	Cement Concrete
3.2	Greenbelt	m²	20630	Lawns, trees and floors will be planted
3.3	Outdoor Network	m²
	Power Supply	m²	1000	Directed burying
	Water Supply	m²	750	Directed burying, Parameter DN200-250
	Heating Supply	m²	750	Directed burying, Parameter DN200
	Water Drainage (Rain and Waste Water in Different Lines)	m²	2000	Directed burying, Parameter DN300-500
3.4	Walls and Gates	m²	1500	2.5m dirt walls are on the south and east side, and transparent iron walls are on the north and west side. Two gates.
3.5	Gage Guard Rooms	m²	320	2 (260 m², 60 m²), brick work, single floor, floor height is 3.0m
3.6	Fill	m²	100000
	Total	m²	21370	Accumulated Area

 

III. Market Analysis and Economic Benefit Forecast

3.1 Social Benefits

    From the perspective of industrial development, this project will promote the development of upstream industries such as nonmetallic mines and raw materials production etc as well as the downstream industries such as building materials, coal-fired power station, steel, mines, petrochemical, wastewater treatment and city construction etc. This project will not only adjust and improve the nonmetallic wear resistant material industry but also save the production cost for the upstream and downstream industries. This project will make better economic benefits and pay more taxes thus contribute to the prosperity of the country.

From the perspective of industrialization of new and high technology, this project will set a model in the commercialization of scientific findings and create new local economic growth force.

   This project will realize direct employments for 222 people and 666-888 people in relevant industries as estimated for about 3-4 times of the direct employment. This will lessen the employment pressure in Siping region and ensure the stability and prosperity of the society.

   In general, this project will create benefits in many aspects of the society.

3.2 Economic Benefits

    This project holds complete proprietary intellectual property right. The products are in the category of new materials and their productions are encouraged by the country. They are resistant of corrosion, acid, base and wear. Their lifetime is 3 times of the normal steel ones while their weight is 1/3 of the normal ones and their cost is 80% of the normal ones.

The products will be used in wide range of industries such as cement, power station, steel, metallurgic, mine, coal mine, petrochemical, wastewater treatment, diversion etc. As the substitutes of the normal metal materials, those products have much longer lifetime so as to reduce the production cost of upstream and downstream industries. With an annual capacity of 40000 tons and annual income of 440 million Yuan, this project will pay the taxes of 8.31555 million Yuan and besides this; it will also create significant benefits in the industrial chain.

To sum up, this project has great technological support, sufficient material resources, big market, feasible financing, high profit, and great anti-risk capability. It will become a model for the nonmetallic especially the wear resistant industry in China and its production in large quantity will promote the social and economic development. It is possible for our products to enter the international market under the background of economic globalization. This project can make significant social and economic benefits.

IV. Total Project Investment and Financing Arrangement

4.1 Total Investment

    The total investment is 199996.1 thousand Yuan which includes constructional investment 141443.2 thousand Yuan and flowing capital 58552.9 thousand Yuan. Please find the details in the following table.

Unit: 10 thousand Yuan

No.	Name	Investment	Percentage of the total investment	Calculation Remark
1	Building Investment	14144.32	70.72
1.1	Construction Cost	3378.98	16.90
1.2	Equipment and Tool Cost	5967.50	29.84
1.3	Installation Cost	833.93	4,17
1.4	Other Cost	2694.27	12.58
1.5	Basic Preparation Cost	1269.65	7.23	10% of the sum of the former 4 items
2	Circulation Fund	5855.29	29.28
	Total Investment	19999.61	100.00

4.2 Investment Plan

    The construction of this project will last 2 years. The calculated investment totals 141.4432 million Yuan. 60% of it will be invested in the first year which is 84.8659 million Yuan. The rest40% will be invested in the second year which is 56.5773 Yuan.

4.3 Financing

    According to the national regulation, the project under construction must have necessary fund. Considering all the aspects of investment scale, production target, industrial policy and capability of the companies, this project will be a totally self-financing one. The total investment is 199.9961 million Yuan among which the construction cost is 141.4432 million Yuan and circulation fund is 58.5529 million Yuan.

V. Cooperation Ways

Joint venture and cooperation

VI. Foreign Investment and Constitution

People invest in cash and get bonus according to the amount of investment.

VII. Project Construction Venue

The address is No.1 of Pengfei Road, Hongzui High and New Technological Development Zone, Siping City. It’s a square plant, 425m in length and 235m in width. Total area is 100000 m². It’s for industrial use.

To the east of the plant lies the reserved industrial land, to the south lies Xinke Road, to the west lies west ring road, to the north lies Siping Xinghe Feed Processing Company and Siping Dahai Fine Chemicals Co., Ltd

VIII. Project Progress

All the approval procedures have been handled. The comprehensive office building, the color plates on the wall of the workshop and the main roads in the plant have been finished.

IX. Outline of Project Organizer

9.1 The site

The address is No.1 of Pengfei Road, Hongzui High and New Technological Development Zone, Siping City. It’s a square plant, 425m in length and 235m in width. Total area is 100000 m². It’s for industrial use. The host company already got the right to use the land.

To the east of the plant lies the reserved industrial land, to the south lies Xinke Road, to the west lies west ring road, to the north lies Siping Xinghe Feed Processing Company and Siping Dahai Fine Chemicals Co., Ltd. The altitude difference within the plant is less than 1.2m, but on the south and east sides, there is an over 2.5 altitude difference between the plant the outer land. So we will build walls on south and east sides.

9.2 Raw Materials

The main materials are wear resistant porcelain paint, modified resin, glass yarn and special mixture. The last is self-development one of the host company and other materials are purchased from domestic and international market.

9.3 Public Facilities

    There are already mature public facilities in the area the host company is located (power supply, water supply, waste water drainage, rain drainage, heating, telecom network and roads). There are necessary pipes and networks around the project site which is convenient for the project. 

9.4 Transportation

    The project site is 1.5 km away from the Management Committee of Hongzui High and New Technology Development Zone, 3.5 km from the center of Siping City, 4.0 km from Siping Railway Station. There is advanced transportation network around the site.

X. Contact Methods

Contact Person: Zhang Zheming (Vice General Manager)

Tel：0086-434-3201185

Fax：0086-434-3203518

Cell phone：0086-13689725975

Email：sipingpengfei@sina.com