Manufacturer of advanced industrial materials, China GengSheng Minerals has inked a definitive deal with Gongyi, Henan Province-based affiliate, to produce 30,000 metric tons of fracture proppants by the end of fiscal 2011.
With this deal, China GengSheng has expanded its total annual production capacity of fracture proppants to 90,000 metric tons, a 20% increase from existing production capacity. The company has also confirmed the termination of its operating lease signed in October 2010 and stopped the fracture proppant production at its leased production plant located in Gongyi, Henan Province.
The leased plant is located in the area where the local government is planning development projects. The plant faces continuous power shortages and other issues has affected the production operations, making the facility unsuitable for high-scale fracture proppant production. The leased plant was anticipated to increase China GengSheng's proppant material production capacity from 15,000 to 75,000 metric tons annually.
The Chairman and Chief Executive Oficer at China GengSheng Minerals, Shunqing Zhang, stated that the company has earned orders worth $14.3 million for fracture proppant products in 2010 and has secured orders worth nearly $15.9 million in the Q1of 2011. The company is assessing the construction and acquisition opportunities in the fracture proppant market in order to improve its revenues and profits.