Hanwei Energy Services Corp. enters into memorandum of understanding to expand clean coal business in China through joint venture with Ershigs, Inc.



    TSX: HE

    VANCOUVER, Dec. 3 /CNW/ - Hanwei Energy Services Corp. ("Hanwei" or the
"Company") is pleased to announce that it has entered into a Memorandum of
Understanding ("MOU") with Ershigs Inc. to establish a 50:50 joint venture
(the "China JV") with Ershigs Inc. ("Ershigs"), a leading US based
manufacturer and installer of fibreglass reinforced plastic ("FRP") products.
Under the MOU, Ershigs and Hanwei have agreed to grant the China JV an
exclusive license to use their fibreglass reinforced plastic FRP products and
technologies, production processes and know-how in order to manufacture and
sell FRP flue gas desulphurization ("FGD") products in the Chinese market. In
addition, subject to mutual agreement, the China JV will manufacture and sell
FRP products to customers for use in other industries in China, including, but
not limited to, the chemical, pulp and paper, and municipal wastewater
treatment industries
    The total investment of the China JV is planned to be RMB 50 million
($6.8 million) with required registered capital of RMB 30 million
($4.1 million), and will include manufacturing assets and cash contributed
equally by both companies. The Ershigs contribution will include large
diameter winders imported from North America for manufacturing FRP chimney
liners. Hanwei will move its existing FRP FGD spray header production lines,
which are to comprise a portion of Hanwei's JV investment, to the Tianjin
facility. The China JV is expected to commence operations in Hanwei's new
Tianjin facility no later than the second quarter of 2008.
    "In 2007 we launched commercial production of FRP spray headers, enhanced
our industry relationships, and established a customer base of FGD contractors
and coal power plant operators. As of the end of October, 2007 we had made
sales to 8 different FGD contractors, but each sale was less than RMB
1 million ($0.14 million) due to our limited FRP FGD product line. With the
full FRP FGD product line that we will be able to offer through the China JV,
each of those sales could have been more than RMB 15 million ($2 million),"
stated Fulai Lang, president and CEO of Hanwei.
    It is estimated that 80 percent of China's energy is generated from
coal-fired power plants. According to the Energy Information Administration in
its 2007 International Energy Outlook, China had 271 gigawatts of installed
coal fired generating capacity in 2004 and is expected to add an estimated
497 gigawatts by 2030. In 2005, China was the world's largest emitter of
sulphur dioxide ("SO(2)"), with its coal-fired plants responsible for over 50%
of the approximately 25 million tonnes of SO(2) emissions in the country, yet
some 70 percent of these plants have no emission controls. China has
recognized the economic and social damage caused by SO(2) emissions and has
set targets for the reduction of these emissions and implemented policies to
encourage the installation of FGD equipment, calling for all new coal-fired
plants and a large percentage of existing coal-fired plants to have SO(2)
emission controls by 2010. FGD systems reduce the amounts of SO(2) emissions
and are widely used throughout North America and Europe, but are new to China.
Most recently, China announced that it intends to invest 1.35 percent of its
GDP each year for the next three years in environmental protection, including
an estimated $80 billion on air pollution.
    "Ershigs is the leading North American provider of FRP products and
solutions for the power industry," continued Mr. Lang. "Ershigs has been in
the FRP business since 1960, and started making FRP chimney stack liners in
1979. Accordingly, they have developed a full range of FRP products and
services using proprietary production technology, materials and know-how. With
Ershigs as our joint venture partner, we will be the first Chinese based
manufacturer that can offer a complete FRP solution for coal power operators
and FGD contractors, including design, products, on-site manufacturing for
large diameter applications, and installation services."
    "The Chinese market is the largest global growth opportunity for our FGD
coal power products, and we have been looking for the best way to enter the
market," commented Tom Pilcher, president of Ershigs. "The combination of
Hanwei's market knowledge and operating expertise in China and our FRP
manufacturing expertise, know-how and proprietary technologies will provide
the China JV with the competitive advantages required to be a market leader in
China. While we plan to focus our initial efforts with Hanwei on the FGD
market where they have established a business infrastructure, we believe that
the China JV will be well positioned to provide products and solutions to a
range of industries in China that require high-quality corrosion resistant
products, including power, chemical, municipal waste water and pulp and paper
applications that we and our affiliates now provide in North America."
    Hanwei expects to complete construction of the Tianjin facility and
relocate its FRP FGD spray header production lines currently operating in
Beijing to Tianjin, no later than the second quarter of 2008. Hanwei has
elected to allocate the Tianjin facility to the China JV, and is considering
using a portion of the site for the potential expansion for FRP wind power
blade manufacturing. Hanwei has elected to keep the 800km of high-pressure FRP
oil pipe production lines originally built for Tianjin at the Company's Daqing
facility, maintaining its current production capacity of 3,200 km at that
location.
    Under the Memorandum of Understanding, Ershigs and Hanwei have agreed to
a target of no later that January 31, 2008 to establish the China JV. As soon
as the China JV is formed, the partners will assign a team of executives to
develop the sales and marketing plan for 2008 and beyond, and commence a
training program for China JV operating team on Ershigs' production technology
and processes.

    About Ershigs, Inc.

    Ershigs, Inc. has been the leading supplier of quality FRP products and
services to the electric power industry for over 40 years. Extensive
experience in FRP design, fabrication, installation and construction
management has enabled Ershigs to address a multitude of challenges for power
market customers in diverse applications including FRP chimney liners, stacks,
ducting, absorber vessels, large diameter storage tanks, abrasion resistant
internal spray header piping, external recycle piping, recirculation cooling
water piping and chemical feed piping in highly corrosive environments and
services.
    Ershigs is a division of Denali Incorporated, which is the largest custom
FRP design, manufacturing and specialty contractor company in the U.S. Denali
has total annual revenues in excess of $225 million and owns three other FRP
manufacturing companies (Belco Mfg., Fabricated Plastics and Containment
Solutions) with a total of eight plants throughout the U.S. and Canada.
Ershigs combined resources include FRP manufacturing operations in Bellingham,
WA, Sarnia, Ontario Canada and Grand Bay, AL; and a large FRP field
manufacturing/construction division which is headquartered in Grand Bay, AL.
Ershigs has recently completed and has under contract more than 50 large-scale
FGD coal power projects in the U.S. market.

    About Hanwei Energy Services Corp.

    Hanwei Energy Services Corp. provides high value products and services
for the energy sector in China and the Asia region. Hanwei serves its major
energy customers through manufacturing facilities in China, producing products
for the oil, coal power and wind power industries. Hanwei is focusing on
providing products and services that address the growing need for improved
energy efficiency and environmental protection in China and the Asia region.

    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
information with respect to Hanwei's graduation from the TSX Venture Exchange
to the Toronto Stock Exchange, Hanwei's increased exposure to investors and
analysts in both the national and global capital, and Hanwei's efforts to
expand its international customer base and attract global business partners.
The forward-looking information in this news release describes Hanwei's
expectations as of the date of this news release. 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 in such
forward-looking information include Hanwei's inability to fulfill the TSX
requirements for listing. When relying on Hanwei's forward-looking information
to make decisions, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. Hanwei
cautions that the foregoing list of material factors is not exhaustive and is
subject to change. For additional information with respect to certain of these
and other factors, refer to the risk factors section of Hanwei's Annual
Information Form dated July 10, 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 HANWEI AS OF THE DATE OF THIS NEWS RELEASE AND,
    ACCORDINGLY, IS SUBJECT TO CHANGE AFTER SUCH DATE. HOWEVER, HANWEI
    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.





For further information:

For further information: Kim Oishi, Senior Vice President, Finance and
Business Development, Telephone: (416) 804-9228, koishi@hanweienergy.com;
Kevin O'Connor, Investor Relations, Telephone: (416) 962-3300,
koconnor@genoa.ca

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