Linglong scraps major China tire project amid delays in Brazil investment

Zhaoyuan, China – Linglong Tire has terminated plans for a major China tire project in Tongchuan, Shaanxi province, while warning that projects in Anhui, China and Brazil are progressing more slowly than expected.

In an 11 May Shanghai Stock Exchange filing, the Chinese tire maker said it would no longer proceed with its planned €800-million Tongchuan facility, originally announced in 2021. (ERJ report)

The unit, which would have been the group’s sixth local manufacturing plant, was designed to produce 15.2 million high-performance radial tires and 500,000 retreaded tires annually.

Linglong said slow progress in preliminary work and delays in implementing supporting measures had created “significant uncertainty” around the project’s expected returns and implementation conditions.

The company said it had reached a preliminary agreement with project partners to terminate the cooperation, subject to completion of internal approval procedures.

Linglong said it has already invested around RMB380 million (€48 million) in the project, mainly for land purchases and preliminary expenses, which it said is now seeking to recover.

Linglong also disclosed delays to its Anhui investment project (ERJ report), which was relocated from Hefei to the Lu’an High-tech Industrial Development Zone in 2022 because of insufficient energy-consumption quotas in Hefei.

The project includes planned annual capacity for 14 million high-performance radial tires and a 30,000-ton waste tire recycling facility.

According to the filing, only residential and supporting facilities have so far been completed, while the main production workshop remains in the planning and design phase.

Linglong said it has invested around RMB140 million in the project to date and will “prudently assess” future investment timing based on market demand and macroeconomic conditions.

The company also said its planned €1-billion Brazil project (ERJ report) has not yet entered “substantive construction investment”, as negotiations over key terms such as shareholding ratios are still ongoing.

The proposed project includes annual production capacity of 14.7 million radial tires and a 35MW solar power plant.

Linglong warned it would "accelerate site-selection work for alternative overseas locations if an agreement cannot be reached soon."

The company added that it plans to control the pace of capital expenditure while focusing on "intelligent upgrades and capacity optimisation" across its existing five domestic and two overseas production bases.