China GengSheng Minerals has planned to build a new facility in Gongyi, Henan Province, China for manufacturing fracture proppants.
The establishment will boost the production capacity from 60,000 metric tons to 150,000 tons of fracture proppants per year. This also includes third party production, 30,000 tons, under OEM deals.
Construction of the new Gongyi plant was started in the 2Q of 2011 and manufacturing is expected to begin in late 2011. The new facility is estimated to be worth about $8.6 million. China GengSheng Minerals has entered into a leasing agreement for 20 years to construct the facility on nearly 87,000 m² of land. The plant will comprise two production lines that will produce fracture proppant materials based on customer requirements.
The demand for low-cost and high-quality proppants is rapidly growing due to worldwide surge in oil & gas drilling activity and new technology advancements. Hence, China GengSheng Minerals believes that this is the right time to increase its manufacturing capacity to utilize this market opportunity. The company is working towards diversification of its marketing channels for international growth.
Funds for the Gongyi facility will be secured via China GengSheng Minerals’ cash flow and proceeds of registered direct offering.