RINO signs FGD contracts in China valued at $118M
DALIAN, China, Jan. 22, 2010 -- RINO International has signed Sinter Flue Gas Desulphurization BOT (Build-Operate-Transfer) contracts with Shougang Jingtang Iron & Steel Co., Ltd...
DALIAN, China, Jan. 22, 2010 -- RINO International Corp., which through its subsidiaries and controlled affiliates (collectively, the "Company" or "RINO"), designs, manufactures, installs and services proprietary and patented wastewater treatment, desulphurization equipment, and high temperature anti-oxidation systems for iron and steel manufacturers in the People's Republic of China ("PRC"), today announced that it signed Sinter Flue Gas Desulphurization BOT (Build-Operate-Transfer) contracts with Shougang Jingtang Iron & Steel Co., Ltd. The BOT contracts consist of a build contract and an operating contract, valued at a total of $118 million. Shougang Jingtang Iron & Steel Co., Ltd. is owned 51% by Shougang Iron & Steel and 49% by Tangshan Iron & Steel Co., Ltd.
The build contract, valued at $33.8 million, includes $25.8 million construction principal and $8 million in interest, covers the design, construction and installation of two Semi-Dry Flue Gas Desulphurization ("FGD") Units, each of which is approximately 500 square meters in size, which collectively produce approximately 11 million tons of sinter mine annually. The project commenced at the Hebei Province Tangshan City Caofeidian Industry zone facility with initial engineering design work on January 1, 2010 and the installation will be completed by September 30, 2010. RINO anticipates these systems will filter at least 91.7% of the sulphur dioxide produced, from sinter mines.
The customer will make an initial payment of $4.0 million one year after the FGD Units have received product approval by the customer and environmental acceptance by the State Environmental Protection Department. The balance of the build contract amount will be paid in annual installments of approximately $3.0 million, which includes interest at a blended rate of 5.75%. Gross margins associated with the build contract are estimated at approximately 38%.
The operating contract, valued at approximately $84.3 million, has a 10- year term, will commence upon receipt of final State Environmental Protection Department approval. RINO will be responsible for daily operation of the two FGD Units installed under the build contract. This includes obtaining desulfurization supplies such as lime, and utilities, such as process water, power and compressed air, in addition to staff salaries, maintenance repair and FGD ash handling fees. Under the operating contract, the customer shall make annual payments to RINO of approximately $8.24 million through monthly installments. RINO will bear the utility expenses estimated at $6.21 million annually, which are the largest component of the operating costs. RINO will also receive $1.9 million for maintenance upgrades of the FGD Units in the fifth year.
After the final payments under the BOT Contracts, the ownership of the FGD Units will be transferred to Shougang Jingtang Iron & Steel Co., Ltd.
"We are extremely pleased to finalize this contract with Shougang Jingtang Iron & Steel Co., Ltd, a top Steel Producer in China with annual production of approximately 10 million tons," stated Mr. Zou Dejun, President and CEO of RINO International. "Shougang Jingtang Iron & Steel Co., Ltd. currently operates two sinters at its newly established production facilities measuring 1,000 square meters in total capacity. The Company has plans to double its capacity in the near term, which will create an incremental future opportunity for additional FDG systems."
"This is the first BOT agreement signed to date and is a means for meeting our customers' operating objectives while providing long term recurring revenue for RINO. This is a true win-win for both parties. We are encouraged by this new model and believe it will serve as a model for future agreements with top tier steel producers as the government continues to support installation of flue gas desulphurization systems and more actively regulates emission standards."
About RINO International
RINO International is an industrial technology-based environmental protection and remediation company based in China. Specifically, through our subsidiaries and controlled affiliates in China, we are engaged in the business of designing, manufacturing, installing and servicing wastewater treatment and exhaust emission desulphurization equipment principally for use in China's iron and steel industry, and anti-oxidation products and equipment designed for use in the manufacture of hot rolled steel plate products. All of our products are custom-built for specific project installations, and we execute supply contracts during the design phase of our projects. Our products are all designed to reduce industrial pollution, energy utilization, or both.