Major companies in 19 cities across Sichuan suffer damage from heavy rain 09-04-2020

According to statistics from China’s National Natural Disaster Management System, as of August 18, heavy rains on August 11 in Sichuan have caused damage in 19 cities and 142 districts, affecting more than 3.4 million people.  Around 165 thousand hectares of crops were damaged, with about 20 thousand hectares area of crops destroyed. The heavy rains in Sichuan also severely damaged around 6,000 residential houses, with an economic loss of approximately RMB 16.4 billion.

Many listed companies in Sichuan, including Sichuan Zhenjing Corporation Limited, Sichuan Hebang, Shenghe Resources Holding and Sichuan Xinjinlu Group, were also affected by the heavy rains. Among the companies, Shenghe Resources Holding suffered the greatest economic loss in the disaster.

Sichuan Hebang announced on August 19 that the company located in Leshan City, Sichuan experienced severe flooding on August 18, and the flood entered the production area with a high water level. The company has currently suspended its production, with an estimated economic loss of RMB 350 million to RMB 450 million, including RMB 70 million to RMB 90 million worth of machines and equipment and RMB 280 million to RMB 360 million worth of inventory.

Machines and products damaged, many factories suspend operation

According to Sichuan Hebang, the damage caused by the flood was so high that the company was unable to evaluate a specific amount of monetary loss. Sichuan Hebang is expected to suspend production less than three months. Sichuan Hebang has already made a plan to resume the company’s business as soon as possible after the temporary suspension.

For Sichuan Zhenjing Corporation Limited, the flood has caused damage in the production area of the company’s factory, with an area of 157 thousand square meters experiencing flood damage, with a water level of around two meters. The first floor of the production area was submerged by the flood, and most main products and ingredients were also damaged. According to Sichuan Zhenjing Corporation Limited, the factory affected by the flood is the company’s main factory, whose revenue accounts for 99% of the company’s total revenue.

Two holding subsidiary companies of Shenghe Resources Holding, Leshan Shenghe Rare Earth Co., Ltd and Rezel Catalysts Corporation were damaged by the heavy rains, with a total estimated economic loss between RMB 390 million and RMB 520 million. According to Shenghe Resources Holding, Leshan Shenghe Rare Earth Co., Ltd has suffered a loss of RMB 240 million to RMB 330 million, with RMB 20 million to RMB 50 million worth of machine and equipment damage, and RMB 220 million to RMB 280 million worth of inventory damage.  Rezel Catalysts Corporation has suffered a loss of RMB 150 million to RMB 190 million, with RMB 30 million to RMB 60 million worth of machine and equipment damage, and RMB 120 million to RMB 130 million worth of inventory damage. The specific amount of damages of the two companies is uncertain. As of the end of the first quarter of 2020, the net profit of Leshan Shenghe Rare Earth Co., Ltd and Rezel Catalysts Corporation was RMB 2.37 million and RMB 6.19 million respectively, accounting for 22.11% and 21.93% of the net profit of Shenghe Resources Holding.

With calcium carbide production halted, companies look to buy from outside sources

Sichuan Xinjinlu Group’s wholly owned company, Minjiang Electrochemical, also encountered damage from the heavy rain. The company reported on August 17 that floodwater entered the factory floor, damaging products, raw materials, and equipment. The company is currently unable to calculate the exact monetary loss caused by the flooding. Minjiang Electrochemical mainly produces calcium carbide, but the company’s operations are temporarily suspended, and Sichuan Xinjinlu will purchase the material from other sources in order to continue the company’s operation.

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