Xinyuan Germanium aims to raise 700m yuan
Carol Chan in Beijing
Lincang Xinyuan Germanium Industry, the mainland's largest germanium producer, plans to raise up to 700 million yuan through an initial public offering next year to fund expansion, according to a senior executive.
The Yunnan-based company planned to issue 25 million new shares - or 25 per cent of its enlarged share capital - to raise between 500 million yuan and 700 million yuan on the Shenzhen Stock Exchange's Small and Medium Enterprise Board in July or August next year, deputy general manager Zheng Hong said during a conference in Beijing.
China Merchants Securities is handling the listing deal.
Mr Zheng said the funds raised would be used to acquire more mines and to expand in the downstream processing business in order to make more high value-added products.
Germanium is a rare element obtained from coal ash or as a by-product in the refining of copper, zinc and lead. It is widely used in infrared optical systems as well as in the chemical, medical and semiconductor industries.
Xinyuan Germanium, which now owns reserves containing about 1,100 tonnes of germanium, has a 60 tonne a year refining capacity and is capable of producing 15 tonnes a year of infrared grade mono-crystallized germanium, a downstream value-added product.
The company, which has more than 50 per cent of the mainland market, reported a net profit of 41 million yuan on a turnover of 120 million yuan last year.
This year's profit was expected to increase to 70 million yuan on turnover of 200 million yuan, as prices rise amid higher demand and increased sales of its high valued-added products, Mr Zheng said. Germanium prices had risen about 20 per cent this year, he said.
'With the increasing use of germanium mono-crystalline and germanium glass as components in the infrared optical industry in the civilian market, we expect prices will continue to rise over the next three years,' Mr Zheng said.
Xinyuan plans to invest 300 million yuan for the development and production of infrared optical germanium materials.
Global demand for civilian infrared thermal imaging cameras is expected to grow at an average annual rate of 15 per cent over the next five years to reach US$3.8 billion by 2012, the company quoted US-based consulting firm Maxtech International's forecast as saying.