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Glass maker eyes cost cuts with opening of new plant

Zhejiang Glass of Jiangsu province has begun a trial run of a 1.6 billion yuan production line with the opening of the first phase of a soda ash plant in Qinghai province, which is expected to lower glass production costs significantly.

The new plant, covering 120 hectares in Delingha, Haixi prefecture, would eventually house two production lines, each capable of producing 900,000 tonnes of soda ash a year, the company said.

The line is expected to start commercial production by the end of next month. Work on the second line is scheduled to start next year but will depend on the success of the first.

When the two production lines come on stream, the glass maker would be the country's second-largest manufacturer of soda ash, a key ingredient in glass making, supplying more than 10 per cent of the mainland's demand.

Zhejiang Glass chairman Feng Guangcheng said the soda ash plant would help cut costs.

'The market price for soda ash has been on the high side of 1,500 to 1,600 yuan per tonne since the end of 2004 and is expected to remain strong this year,' Mr Feng said. 'Being able to produce this key raw material internally will enable us to lower production costs for flat glass by 10 per cent and at the same time expand our income source.'

He is optimistic the soda ash business will produce a return on investment of more than 15 per cent a year and achieve a shorter payback period than that for the flat glass business.

Of the first-phase investment, 1.2 billion yuan came from long-term bank loans, while the rest was from internal sources.

With five flat glass lines in production and three more under construction, Zhejiang Glass, one of the country's top five manufacturers, is expected to use 250,000 tonnes of soda ash next year, or almost 30 per cent of the plant's soda ash output. The production balance would be sold to other glass makers and to the chemical, electronic and metals industries.

Flat glass is used in the construction industry.

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