TAIYUAN, China, Aug. 21 /Xinhua-PRNewswire-FirstCall/--Beicang Iron & Steel, Inc. (OTC Bulletin Board: BEIC)("BEIC" or the "Company") announces today that Pinglu County Changhong Ferrochromium Co., Ltd., ("PL") one of the subsidiaries of the Company, has leased an ore heating furnace of 12,500 KVA to produce high-carbon ferrochrome alloy since June 1st, 2007, thus increasing its production capacity to meet growing market demands.
On June 1, 2007, PL reached a lease agreement with Shanxi Yuncheng Yunneng Electric Power Enterprise Co., Ltd., ("Yunneng") to rent its ore heating furnace of 12,500KVA for an initial term of 7 months. Upon the maturity date of the term, the agreement may be renewed upon mutual consent at the end of each financial year. As one of the earliest group of companies to obtain the admittance license from the State Permission for Ferrochromium Production, PL has always been devoted to producing high quality ferrochrome products to supply iron and steel enterprises. PL had been approached by other companies to take-over increase production capacity. Currently, PL owns two ore heating furnaces of 6,500KVA. After putting the third furnace of 12,500 KVA into production, PL's monthly output increased by 1,200 tons or a monthly sales revenue of $1.2 million.
PL's production increase was driven by a growing market demand. In the first half year of 2007, the total output of stainless steel in Taiyuan Iron & Steel Co., Ltd. (TISCO) was 955.9 thousand tons, representing an increase of 107.53% compared with the previous year. The substantial growth of China's stainless steel market is directly driven by the development of raw material market. In 2007, the demand of ferrochromium by TISCO, one of PL's largest clients, is estimated to be 800,000 tons. At present, the supply of ferrochrome still falls short of the demand.
Mr. Hou Beicang, Chairman of the board of directors and CEO of BEIC, stated, "BEIC has always been devoted to supplying high quality raw materials to iron and steel manufacturing enterprises. Although production capacity has been increased, we cannot satisfy the raw material demand from iron and steel enterprises since their output has also increased. PL's ferrochrome products are mainly supplied to TISCO and those iron and steel plants surrounding Shanxi province. Under the premise of a quality guarantee, the Company will continuously enlarge its production capacity to fulfill market demand, thus increasing the profitability and bringing higher investment returns for its investors".
BEIC is a Nevada corporation that is publicly listed in the US. It is focused on providing elementary refined raw materials to iron and steel enterprises. The main products of the company include pelletized ore and ferrochromium alloy products, which are essential for iron-making and stainless steel production. The company produces pelletized ore and ferrochromium alloy through its two subsidiaries in Shanxi province, P.R.China, Fanshi county Xinyu Iron Resource Co., Ltd. (FS) and Pinglu County Changhong Ferrochromium Co., Ltd. (PL). PL is capable of an annual production capacity of 40,000 tons of ferrochromium alloy.
