VANCOUVER, Aug. 1 /CNW/ - Hanwei Energy Services Corp. ("Hanwei" or the
"Company") announced today that it has entered into a joint venture agreement
with Ershigs, Inc. ("Ershigs") as previously announced (see press release
dated December 3, 2007) to become a leading provider of fibreglass reinforced
plastic ("FRP") products to China. Per the terms of the joint venture
agreement, the two companies will form a 50:50 joint venture (the "Joint
Venture") incorporated in Canada, which will establish a wholly foreign owned
enterprise subsidiary (the "WFOE") in Beijing, China. Hanwei and Ershigs will
invest a total of RMB50 million (US$7.3 million) in the joint venture during
2008 and 2009 on an equal basis. Ershigs will contribute large diameter FRP
winding equipment and certain other assets to the WFOE through the Joint
Venture, and Hanwei's subsidiary, Beijing Long Road Pipe Technology Co., Ltd.
("Long Road"), will sell its current flue gas desulphurization ("FGD") spray
header production lines and various assets to the WFOE. Ershigs and Hanwei,
through its subsidiary Long Road, will license their FRP-related intellectual
property and technologies to the Joint Venture and its subsidiary. In
addition, Ershigs will provide initial training to support the technology
transfer to the Joint Venture and ongoing technical support to the WFOE.
The WFOE is expected to be established in August 2008 and to begin
operations in the fourth quarter of 2008. The board and management team, which
is currently being assembled, will include seasoned industry professionals
from both companies. Management and sales will be based at Hanwei's offices in
Beijing, with engineering and manufacturing operating within premises rented
from Hanwei in Tianjin, China. As previously disclosed, Hanwei is currently
building a facility in Tianjin, China that will be used for FGD products and
to expand its wind blade production capacity.
The WFOE will initially offer FRP spray headers, ducts and chimney liners
targeted at FGD systems for coal fired plants. Hanwei and Ershigs estimate
that the total addressable market in China for FRP products for FGD solutions
over the next three years is more than RMB 10.6 billion (US$1.5 billion) and
RMB6.8 billion (US$990 million) for the initial products of the Joint Venture.
The market is supported by government policy that requires the operators of
coal fired plants to install sulphur dioxide (SO(2)) scrubbers in all new
plants and retrofit all large plants.
After establishing production and sales infrastructure for the initial
FGD products, the Joint Venture plans to add the full range of Ershigs' FRP
FGD products to its offering for the China coal fired pollution control
market. In addition, the WFOE plans to identify other sectors in China where
Ershigs' FRP technology can be used to develop a leading market share, such as
tanks and pipes for petrochemical, pulp & paper and water applications.
"Ershigs has been looking for a way to enter the China market for
advanced FRP applications, which includes the largest global market for FGD
systems to reduce sulphur dioxide emissions from coal fired power plants,"
stated Tom Pilcher, president of Ershigs. "We believe that Hanwei's customer
relationships, market knowledge and extensive operating expertise in China,
combined with our sales and engineering expertise, and proprietary technology
for producing a full range of FRP products will provide the Joint Venture with
a competitive advantage as a first mover, offering advanced FRP solutions to
the growing China market."
"The FGD market in China is in its early stages and there are no
significant competitors operating in China that can offer high quality,
reliable large diameter FRP solutions," stated Fulai Lang, president and CEO
of Hanwei. "Over 75 percent of China's installed electrical generating
capacity is from coal-fired generators, and the number of generators will
continue to increase in order to satisfy China's need for energy. Through the
Joint Venture, we intend to combine Ershigs' strengths in technology,
production, on-site management, operation management and project performance
with our own strengths in marketing and government relationships to create a
quality brand that offers customers FGD products and solutions that were
previously unavailable in our target market. With Ershigs as our partner, we
expect to have the financial, human and technology resources to achieve a
leading market share of the addressable market for spray headers, ducts and
chimney liners in China. We also look forward to the potential to develop FRP
solutions for other industries in China that Ershigs has been servicing in USA
for the last 40 years."
About Ershigs Inc.
Ershigs is a division of Denali Incorporated, which is the largest custom
FRP design, manufacturing and specialty contractor in the U.S. Ershigs has
been the leading supplier of quality FRP products and services to the U.S.
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 combined
resources include FRP manufacturing operations in Bellingham, Washington;
Sarnia, Ontario; and Grand Bay, Alabama; and a large FRP field
manufacturing/construction division which is headquartered in Grand Bay,
Alabama. Ershigs has recently completed and/or 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 the assembly and recruitment of board members,
management and staff for the Joint Venture, the initial product offerings of
the Joint Venture, the addition of the full range of Ershigs' FRP products to
the Joint Venture's offerings for the China FGD market, the market position of
the Joint Venture as a provider of FRP products to China, the expected market
share to be achieved by the Joint Venture, the expected competitive advantages
of the Joint Venture and the achievement of its business objectives. 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 the Joint Venture may not be able to
assemble and recruit board members, management and staff for the Joint Venture
due to lack of qualified candidates or unacceptable terms, the Joint Venture
may not have any product offerings or its product offerings may change, the
Joint Venture may not be able to achieve a particular market share or any
market share, the Joint Venture may not gain any competitive advantages and
the Joint Venture may not be able to achieve all of its business objectives
due to a variety of factors. 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. READERS SHOULD NOT PLACE
UNDUE IMPORTANCE ON FORWARD-LOOKING INFORMATION AND SHOULD NOT RELY UPON THIS
INFORMATION AS OF ANY OTHER DATE. WHILE HANWEI MAY ELECT TO, IT DOES NOT
UNDERTAKE TO UPDATE THIS INFORMATION AT ANY PARTICULAR TIME.
For further information:
For further information: Kim Oishi, Senior Vice President, Finance and
Business Development, Telephone: (416) 804-9228, firstname.lastname@example.org;
Kevin O'Connor, Investor Relations, Telephone: (416) 962-3300,