Hanwei Completes Arrangements for the Supply of Up to RMB 1.7 Billion worth of Wind Power Products



    VANCOUVER, June 1 /CNW/ - Hanwei Energy Services Corp. ("Hanwei" or the
"Company") is pleased to announce that Daqing Harvest Longwall High Pressure
Pipe Co. Ltd. ("Harvest"), its 82.15% owned subsidiary, has signed a
cooperation agreement with Daqing Deta Electric Co. Ltd. ("Deta") that
includes an initial order to manufacture approximately RMB 200 million
(C$28.1 million) worth of wind power products, including turbines, blades and
towers, and an expression of intent to place additional orders with Harvest
for wind power products in the amount of RMB 600 million (C$84.4 million) in
2008 and RMB 900 million (C$126.6 million) in 2009, subject to satisfactory
completion by Harvest of the 2007 order. Under the cooperation agreement,
Harvest will use its expertise in developing and manufacturing high-pressure
fibre glass reinforced plastic ("FRP") wind power blades, and will manage the
assembly of the turbines and towers, while Deta will provide the wind power
technology and expertise. The cooperation agreement stipulates that Harvest is
entitled to earn a net profit after tax return of 15% on the RMB 1.7 billion
($239 million) worth of wind power equipment orders intended to be placed over
the three years.
    With its entry into the wind power equipment business, Hanwei has made
significant progress in its strategy of leveraging its competitive advantages
in the development and production of FRP products and diversifying into other
energy sectors. In 2006, all of Hanwei's revenues were from the production of
high-pressure FRP pipes for China's oil sectors. In 2007, Hanwei expects to
add new revenues streams from FRP products sold to the oil industry in
Kazakhstan and to the coal power and wind power industries in China.
    According to a report by the Global Wind Energy Council ("GWEC"), a wind
power industry association, in 2006 approximately US$23 billion of new wind
power generation equipment was installed throughout the world, representing a
25% increase in global wind power capacity to more than 74 gigawatts ("GW").
The GWEC report estimated that in 2006, China's wind power capacity grew by
more than 100%, or 1,347 megawatts (MW) to 2,604 MW. In February 2005, China
published a renewable energy law, that came into force on January 1, 2006,
under which national targets for renewable energy were established, to be
supported by various measures, including subsidies, cost sharing and
requirements that provincial power grids purchase certain amounts of renewable
energy. Recently, the Chinese government proposed a target of 30 GW of wind
power generation by 2020. Inner Mongolia, including the Durbert Mongolia
Autonomous County, where the equipment Harvest is producing will be installed,
is forecasted to host some 33% or 10,000 MW of China's wind capacity by 2020.
    The terms and conditions of the initial order are set out in a separate
manufacturing agreement, under which Deta has placed a binding order for the
manufacture and delivery of various wind power products, including 20
turbines, 20 blade sets and 30 towers for an estimated total sales price of
RMB 204.52 million (C$28.77 million). Deta is required to pay Harvest a
deposit equal to 5% of the estimated total sales price, or RMB 10.23 million
(C$1.44 million) within 30 days after the effective date of the manufacturing
agreement, with the balance to be paid on a percentage of completion basis,
subject to Harvest meeting certain delivery dates. Harvest is required to
complete the delivery of the equipment, and Deta is required to pay Harvest
75% of estimated total sales price before March 30, 2008. Deta is required to
pay the remaining 25%, including any adjustments required to provide that
Harvest will earn a net profit after tax return of 15%, within 30 days of
issuing a satisfactory preliminary inspection report and, in any event, before
June 30, 2008.
    Deta, a Chinese company, has signed an agreement with Daqing Ruihao
Energy Technology Co. ("Ruihao"), a privately-owned Chinese company based in
Daqing, Heilongjiang Province, China to provide wind power equipment. Ruihao
has an exclusive right to develop wind power in Durbert Mongolia Autonomous
County in Heilongjiang Province and plans to develop 860 MW of wind power. To
complete the projects contemplated in the agreements and achieve the longer
term goal of becoming leaders in the wind power industry, Deta, Ruihao and
Harvest will need to recruit and hire new skilled employees, continue to
improve wind power technologies and manufacturing capabilities and source
additional debt and equity funding.
    "Harvest's expertise in FRP technology and manufacturing has enabled
Hanwei to diversify into the wind power equipment business, where the ability
to manufacture high quality FRP blades is a key success factor. In 2007 and
beyond, Hanwei has growth opportunities in the oil, coal power and wind power
industries for high-quality FRP products," said Mr. Fulai Lang, President and
CEO of Hanwei, "Ruihao, Deta and Harvest have formed an integrated strategic
partnership that is well positioned to develop one of China's largest wind
resources. Deta is the only company that owns wind power technology certified
under the China's national standards, and has expertise in the assembly and
servicing of wind turbines in the Daqing area; Ruihao has the exclusive rights
to develop wind power in the Dubert Mongolia Autonomous County, and has
completed feasibility studies and has government approval; and, Harvest is the
only company that has FRP manufacturing and technical teams with a resource of
skilled industrial labour in the Daqing area."
    Harvest intends to manufacture the wind power equipment at a site,
located near its high-pressure FRP pipe plant in Daqing, which has been
provided by the Sa Er Tu District Government, under the Daqing municipal
government on a rent free basis. Harvest has allocated approximately
C$2 million for capital expenditures to fund the moulds, assembly cranes and
other equipment required to manufacture and assemble the wind power products.
Harvest will fund the initial working capital requirements with cash on hand,
but expects it will require additional debt or equity funding for its new wind
power business. Harvest expects to commence production of the initial order in
June 2007.

    
              THE TSX VENTURE EXCHANGE HAS NEITHER APPROVED NOR
               DISAPPROVED THE CONTENTS OF THIS NEWS RELEASE.
    

    FORWARD LOOKING INFORMATION

    Certain information in this news release is forward-looking within the
meaning of certain securities laws, and is subject to important risks,
uncertainties and assumptions. This forward-looking information includes,
among other things, information with respect to management's estimates of
capital requirements, as well as information with respect to the Company's
beliefs, plans, expectations, anticipations, estimates and intentions. The
words "may", "could", "should", "would", "suspect", "outlook", "believe",
"anticipate", "estimate", "expect", "intend", "plan", "target" and similar
words and expressions are used to identify forward-looking information. The
forward-looking information in this news release describes the Company's
expectations as of June 1, 2007.
    The results or events anticipated or predicted in such forward-looking
information may differ materially from actual results or events. Material
factors which could cause actual results or events to differ materially from a
conclusion, forecast or projection in such forward-looking information
include, among others: general economic factors, adverse industry events, its
ability to make and integrate acquisitions, industry and government
regulation, risks associated with integrating new production lines, risks
associated with entering new product lines and markets, risks associated with
establishing new production facilities and the potential for costs over-runs
or delays associated with construction, a risk that the Company may be unable
to procure needed capital for its growth plans, a risk that the agreements
with Deta may not complete on the terms currently agreed or that Deta may have
insufficient funds to make the required payments to Harvest, risks associated
with doing business with Provincial Chinese Governments, including a risk that
the Heilongjiang provincial power authority may not fulfill its promise to
purchase all of the wind power developed by Ruihao, and a risk that the
Harvest may not be able to fulfill its obligations for the wind power products
as set out in the agreements with Deta.
    The Company cautions that the foregoing list of material factors is not
exhaustive. When relying on the Company's forward-looking information to make
decisions, investors and others should carefully consider the foregoing
factors and other uncertainties and potential events. The Company has assumed
a certain progression, which may not be realized. It has also assumed that the
material factors referred to in the previous paragraph will not cause such
forward-looking information to differ materially from actual results or
events. However, the list of these factors is not exhaustive and is subject to
change and there can be no assurance that such assumptions will reflect the
actual outcome of such items or factors. For additional information with
respect to certain of these and other factors, refer to the Risk Factors
section of the Company's management's discussion and analysis dated May 15,
2007 filed with Canadian securities regulators, which is available on SEDAR at
www.sedar.com.

    THE FORWARD-LOOKING INFORMATION CONTAINED IN THIS NEWS RELEASE REPRESENTS
THE EXPECTATIONS OF THE COMPANY AS OF June 1, 2007 AND, ACCORDINGLY, IS
SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER, THE COMPANY EXPRESSLY DISCLAIMS
ANY INTENTION OR OBLIGATION TO UPDATE OR REVISE ANY FORWARD-LOOKING
INFORMATION, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE, EXCEPT AS REQUIRED BY APPLICABLE LAW.

    %SEDAR: 00023002E




For further information:

For further information: Kim Oishi, VP of Finance and Business
Development, (416) 804-9228, koishi@hanweienergy.com; Rick Yucai Huang, Chief
Financial Officer, (416) 725-9758, yhuang@hanweienergy.com

Organization Profile

HANWEI ENERGY SERVICES CORP.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890