Richful Announces Project Delays
Richful Announces Project Delays – Richful Lube Additive Co. recently announced a postponement in the timelines for two significant projects: the modernization of a lubricant additives plant and the construction of a cutting-edge research center. Originally set to conclude by the end of 2023, these projects are now expected to be completed by the end of 2025.
The primary project entails the retrofitting of the company’s existing facility located in Xinxiang, China. This includes the establishment of production lines with an annual capacity of 150,000 metric tons for chemical additives, encompassing 100,000 tons of alkylbenzene sulfonate and 50,000 tons of ashless dispersant. The initial phase, capable of producing 60,000 tons annually, was successfully commissioned in 2022. The remaining capacity expansion, along with an additional 460,000-ton additives project also situated in Xinxiang county, is now slated for completion by the end of 2025.
The 460,000-ton project, featuring production lines for 125,000 tons of zinc dialkyldithiophosphate and 130,000 tons of ashless dispersant, was initially announced by the company in 2022 as a replacement for a previously planned 72,800-ton additives project from 2020. In response to a warning note from the Shenzhen Stock Exchange, which highlighted a deviation from the originally stated use of proceeds from a stock offering, Richful clarified on December 29th that the funds raised in the 2020 stock offering, initially designated for the 72,800-ton project, were redirected towards the 460,000-ton ZDDP and ashless dispersant project.
Richful emphatically denied any wrongdoing and refrained from providing further comments in response to an interview request from Lube Report.
The second project pertains to a research center built to international standards. Richful cited a delay in obtaining land use rights as the reason for the setback in a statement released on December 29th.
Throughout 2023, during various conference calls with investors, Richful fielded inquiries about the perceived “excessive” scale of the larger project, especially in light of the sluggish sales of internal combustion engine vehicles in China. Company representatives clarified that their aim was to serve the global market, emphasizing that engine oils represent just one segment of the myriad of products utilizing their additives.
Richful reported that it had commenced supplying additives for Shell marine oils sold in Hong Kong and anticipated expanding to additional markets, including Japan, the United Arab Emirates, and South Korea in 2024. They also projected becoming a supplier for ExxonMobil marine oils in 2024, noting that an ExxonMobil gear oil unit could potentially become a client if Richful obtained Flender certification for its additives. Flender is a prominent mechanical and electrical drive technology company.
In the first half of 2023, exports accounted for 76% of Richful’s total sales, during which their net profits experienced a remarkable 71% year-on-year growth, reaching ¥249 million (U.S. $34.8 million), as disclosed in the company’s half-year report for 2023 issued in August of the same year. In the report, Richful cautioned that geopolitical shifts could substantially impact their business.
In 2022, Richful received support from the China Council for the Promotion of International Trade, an organization with a nationwide presence dedicated to assisting domestic companies in expanding their international market presence. This support was particularly beneficial in expanding business operations in Russia after Western additives suppliers withdrew due to Russia’s actions in Ukraine. As a result, Richful nearly doubled its net profits in 2022, reaching ¥588 million, compared to the previous year.
