Jindan Technology to issue USD 98 million convertible bonds injecting into 75,000 t per year PLA project

    Summary: In Nov., Jindan Technology proposed to issue USD98 million convertible bonds for the development of a 75,000 t/a PLA project.   

    On 8 Nov., 2022, Henan Jindan Lactic Acid Technology Co., Ltd. (Jindan Technology) announced public offering of convertible bonds in a maximum value of USD98.28 million (RMB700 million), with a maturity of 6 years. The proceeds are proposed to be used in the 75,000 t/a biodegradable new material (polylactic acid/PLA) project and replenishing working capital.   

    In April 2020, Jindan Technology planned to use a portion of the funds raised in its IPO in the construction projects for 10,000 t/a PLA and 50,000 t/a high-gloss pure L-lactic acid. In Nov. 2021, the construction of 50,000 t/a high-gloss pure L-lactic acid was completed and started operation, while the original project for 10,000 t/a PLA had never been initiated by July 2022, and was then altered into the 75,000 t/a biodegradable new material (PLA) project to be implemented by the subsidiary Jindan Biological New Material Technology Co., Ltd. (Jindan New Material) with total planned investment increasing from the original USD7.39 million (RMB52.62 million) to USD123.85 million (RMB882.12 million).   

    Jindan Technology said that the increasing production capacity could be properly distributed after a certain run-in period for new capacity facility to reach full operation and the market to absorb, adding that China's PLA industry is in the nascent stage seeing PLA product prices notably higher than that of the traditional plastics, and at present the environmental protection regulations and policies are what encourage the downstream demand the most.   

    On 17 Nov., 2022, the environmental impact assessment document of Jindan New Material's 75,000 t/a biodegradable new material (PLA) project was publicised by authority before granting approval.   

    Project overview   

    
•       Construction nature: Reconstruction and expansion     
    
•       Construction site: Dancheng County, Zhoukou City, Henan Province     
    
•       Site area: 60,000 m²     
    
•       Total investment: USD123.85 million (RMB882.12 million)     
    
•       Construction content: New lactide and PLA production units will be constructed accompanied by new and existing supporting facilities, storage, transportation and environmentally-friendly structures.     
    
•       Designed capacity:     
    
•       75,000 t/a PLA (purity≥95%)     
    
•       9,785 t/a oligolactic acid (by-product), which can easily generate industrial-grade lactic acid (LA); Jindan Technology and Dengzhou Jinbi Bio-material Technology Co., Ltd. have reached purchase intention with Jindan New Material for 5,000 t/a LA and 6,000 t/a LA, respectively.     
    
•       Production technique: Indirect method (lactide ring-opening polymerisation)—synthesise PLA using LA as raw material and purify crude lactide generated via dehydration, depolymerization and cyclization; product yield is expected to be 70.8%.     
    
•       Raw materials:     
    
•       105,000 t/a L-lactic acid supplied by Jindan Technology through pipelines     
    
•       Jindan Technology currently has a two-phased project for 400,000 t/a starch and 200,000 t/a high-gloss pure LA—phase I including 150,000 t/a high-gloss pure LA has entered production, and phase II including 50,000 t/a high-gloss pure LA is under construction, projected to start production in early 2024—expected to meet the material demand for this 75,000 t/a PLA project.     
    
•       Labour quota: 100 workers     
    
•       Working system: three 8-hour shifts per day for 333 days per year     
    
•       Construction period: 24 months ending in early 2025