Gulf Resources begins construction on new chemical additives production line for wastewater treatment

NEW YORK, NY, and SHANDONG, China, Jan. 4, 2010 -- Gulf Resources Inc. has commenced the construction of its new chemical additives production line for wastewater treatment...

NEW YORK, NY, and SHANDONG, China, Jan. 4, 2010 -- Gulf Resources Inc., a leading manufacturer of bromine, crude salt and specialty chemical products in China, today announced that the Company commenced the construction of the new chemical additives production line for wastewater treatment.

The Company's board of directors approved the construction of the new chemical additives line and expects it to start production in July of 2010 with chemical additives production capacity of 3,000 metric tons per year. The new production line will be located in the Company's Yuxing Chemical Plant and the Company estimates that it will contribute approximately $9 to $10 million in revenues with an estimated gross profit margin over 40% in the first year of operation. The capital expenditure for the new production line is expected to be approximately $8 to $10 million. The Company expects to fund the new production line with cash from operations.

The market capacity for wastewater treatment additives in China was about 50,000 metric tons in 2009, and is expected to increase at an annual rate of about 15% over the next few years due to the Chinese government's focus on environmental protection and efforts to increase the amount of safe drinking water. China's Ministry of Environmental Protection recently announced plans to invest RMB 90 billion ($13.2 billion) to construct sewage treatment systems aimed at keeping drinking water safe. Pricing for chemical additives has been rising in recent months due to increased demand, reaching $21,000 per metric ton in the fourth quarter of 2009.

"China's planned investment in wastewater treatment systems over the next few years will accelerate demand for chemical additives used in the treatment of wastewater," said Mr. Xiaobin Liu, Chief Executive Officer of Gulf Resources. "Bromine is one of the main ingredients used in wastewater treatment chemical additives. As one of China's largest bromine producers, Gulf Resources is ideally positioned to capture growing demand for this value added product. We expect our new production line will make a significant contribution to revenue and profit starting in the second half of 2010. The new production line is an important ingredient of our long term strategy."

About Gulf Resources Inc.
Gulf Resources Inc. operates through two wholly-owned subsidiaries, Shouguang City Haoyuan Chemical Company Limited ("SCHC") and Shouguang Yuxin Chemical Industry Co., Limited ("SYCI"). The Company believes that it is one of the largest producers of bromine in China. Elemental Bromine is used to manufacture a wide variety of compounds utilized in industry and agriculture. Through SYCI, the Company manufactures chemical products utilized in a variety of applications, including oil & gas field explorations and as papermaking chemical agents. For more information about the Company, please visit http://www.gulfresourcesinc.cn .

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