Kangtai Additive Project Scaled Back


A company attempting to acquire most of Kangtai Lubricant Additive Co. has scaled back the size of an additive factory now under construction in order to obtain a necessary environmental permit.

Chemical supplier Rianlon said last week that it reduced the design capacity of a chemical additive plant being built in Zhuhai, Liaoning province, from 50,000 metric tons per year to 38,000 t/y and that it subsequently received approval from a provincial agency conducting an energy conservation review.

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Armed with that approval, Rianlon said it will ask the Shenzhen Stock Exchange to resume a stalled review of its bid to acquire 92.2% of Kantai’s stock shares.

Rianlon, which is based in Tianjin, China, first announced its intention to acquire control of Kangtai in 12 months ago. The transaction, which would cost the company ¥596 million (U.S. $92.2 million), requires stock exchange approval because it would represent a restructuring of the company. Rianlon’s activities have until now focused on supply of anti-oxidants and other chemicals that prevent and slow the aging of polymer materials such as plastics, rubber, elastomers and paints.

The Mergers and Acquisitions and Restructuring Committee of the Shenzhen exchange’s General Enterprise Market endorsed the deal in September, but the review was nevertheless held up because the Zhuhai plant had not received an energy conservation permit from the provincial government – even though construction had already begun.

In a Nov. 29 filing with the stock exchange, Rianlon said that lowering the capacity of the additive plant would reduce its annual consumption of standard coal to 3,400 tons per year – within a range that qualifies as reducing energy use and emissions generation. It also eliminated heating and waste incineration facilities that had been included in the project designs.

Kangtai already operates a plant in Jinzhou, China, with capacity to make 93,000 t/y of lubricant additives packages and components, making it one of the largest lube additive companies based in China. Rianlon has said that it views lube additives as a growth industry and that it is eager to acquire a controlling stake in Kangtai.

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