Zhongtai chemical invests heavily in calcium carbide project and plans

Due to the rising price of calcium carbide and the increasing pressure of outsourcing, Xinjiang Zhongtai decided to take the holding subsidiary Zhongtai chemical salt Co., Ltd. of tuokesun County as the main body to build a 500000 ton calcium carbide project in the area of tuokesun County, with a total investment of 850 million yuan; at the same time, it will set up a new company engaged in the production and sales of lime to supply lime raw materials to Zhongtai chemical calcium carbide production enterprises. The calcium carbide project will be constructed in two phases. The first phase will be constructed according to the annual output of 300000 tons. According to the needs of the project construction, Zhongtai chemical plans to increase the cash of 200 million yuan to the salt company. Another shareholder of the salt company will not participate in the capital increase. The capital increase will be used for the calcium carbide project construction of the salt company.

The main business of salt chemical company is industrial salt mining and sales, which is the supply base of Zhongtai chemical raw salt. Referring to the reasons for the construction of calcium carbide project, Zhongtai chemical said that calcium carbide is the main production raw material of the company, and nearly 70% of calcium carbide required for PVC resin production of the company needs to be purchased. Influenced by factors such as the rising price of upstream raw materials, the purchase price of calcium carbide has been rising since the beginning of this year. In the first half of the year, the company has taken measures such as paying the advance payment and signing the strategic cooperation agreement to lock in part of the price of calcium carbide. However, the current trend of calcium carbide price rising is still unchanged, which has brought greater pressure on the production and operation of the company in the second half of the year. At the same time, in order to speed up the construction of lime base and stabilize the supply of limestone, Xinjiang Zhonglu Mining Co., Ltd., a wholly-owned company of Zhongtai chemical, will invest in the establishment of Xinjiang Zhonglu calcium Industry Co., Ltd. the new company is mainly engaged in the production and sale of lime, with a registered capital of 2 million yuan.

The production plant is located near the mining area of Zhonglu company, mainly using the limestone of Zhonglu company to process and produce lime, Supply lime raw materials to Zhongtai chemical calcium carbide production enterprise. Considering the effective use of funds, and Zhongtai chemical has not been engaged in lime production business, therefore, after the establishment of the new company, a unit or individual with rich production management experience and high technical level will be selected to contract the new company. The Contractor shall be responsible for the construction of lime production line and organization of production, and shall be fully responsible for the operation and management, enjoy the corresponding operation benefits, and bear the corresponding legal liabilities of the new contracting company. At the same time, Zhongtai chemical also provided Ningxia Dadi Metallurgical Chemical Co., Ltd. with calcium carbide with a guarantee of 50 million yuan. Ningxia Dadi is the main supplier of calcium carbide for the company, and the two sides have a good cooperative relationship for many years. Due to the rapid rise of raw materials in the near future, Ningxia Dadi applied for a comprehensive credit line of RMB 50 million from Yinchuan branch of Bank of communications to meet the needs of daily production and operation.

In order to strengthen cooperation and common development, Zhongtai chemical provided guarantee for Ningxia Dadi to apply for a comprehensive credit of RMB 50 million according to its own guarantee capacity. Ningxia Dadi provides counter guarantee to the company with the appraised corresponding machinery and equipment assets as mortgage. The above matters shall be deliberated and approved by the 10th Session of the 3rd board of directors of the company. As of the announcement date, the company's actual total amount of external guarantee is 841.9 million yuan, accounting for 35.34% of the company's latest audited net assets. According to Zhongtai chemical, the above three measures will play an important role in stabilizing the company's calcium carbide and limestone supply in the future, reducing production costs and stabilizing the company's industrial chain.