Haikou, China – China’s largest natural rubber maker Hainan Rubber Group is raising up to 3.9 billion yuan (€523 million) in private placement for cash flow supplements, an acquisition deal as well as two plantation projects.
The plantation projects, both planed at the company’s existing sites, include a 127-million-square-metre one for fruits and a 200-million-square-metre one speciality rubber targeting aircraft tires and the likes, said Hainan Rubber’s filing in May.
The fruit project, an attempt to diversify the company’s business and boost profitability, has €181 million investment earmarked, of which €134 million will come from the placement.
A total of €271 million, including €201 million from the placement, will be pumped into the specialty rubber project, with new trees planted at an even pace over a five-year period until 2020.
“Global natural rubber consumption has slowed down, but the demand for high-quality rubber used in aviation, engineering and healthcare kept growing,” said the filing. The project is expected to have a €33 million average annual profit during its operational period from 2024 to 2052.
Last July, military tires made with the company’s rubber material passed appraisal, ending the country’s complete dependence on imports for advanced rubber materials used in aircraft tires. Hainan Rubber’s specialty rubber sales accounted for 30% of its 122,000 tonne total production in 2015, the company told ERJ.
The company is also slating a €54 million acquisition of R1 International Pte, the world’s largest rubber trader last year with 670,000 trade volume, 5.4% of total global consumption. The deal pledges to buy 60% of R1 from Hainan Rubber’s controlling shareholder “to avoid horizontal competition” and “further expand its business along the industrial chain.”