Keyuan Petrochemicals, Inc., has entered into land use right transfer agreements with the local government of Ningbo, Keyuan has acquired four plots of land adjacent to the Company's current facilities totaling approximately 1.2 mln sq ft. The total cost of the land was approx US$5.8 mln, lower than the Company's original US$20 mln projection. By acquiring the land, the Company will be able to begin the construction of a storage facility, a raw material pre-treatment facility and an asphalt production facility as the Company originally planned. In addition, in Q3-2010, Keyuan will also begin building a new Styrene-Butadiene-Styrene (SBS) production facility on the land, which will be included in the expansion plan together with the three facilities mentioned above.
"We are pleased to have secured the land we needed to begin our next phase of expansion," said Chungfeng Tao, Chairman and Chief Executive Officer of Keyuan. "We see a tremendous opportunity to gain market share in the SBS market, given the value-added nature of the product and the supply-demand imbalance that exists today. Our expansion plan includes four new state-of-the-art facilities and they will not only allow us to increase our capacity and expand into new markets but also make us more efficient." Once completed, the new facilities will add an additional 100,000 MT of petrochemical storage capacity, a raw materials pre-treatment plant, 300,000 MT asphalt production capacity, and 70,000 MT of SBS production capacity. The SBS facility and the storage capacity expansion is expected to be completed in H2-2011; and the raw materials pre-treatment and asphalt production facilities to be completed in H1-2012.