Armco Metals Holdings, Inc. (AMCO) Inks Agreement with Chile Armco Metals Holdings, Inc. (AMCO) Inks Agreement with Chile Supplier for Woodchips Purchase
Today before the opening bell, Armco Metals announced its subsidiary, Armco Metals International, Inc., has inked an agreement with a Chilean supplier for a woodchips purchase. The agreement was initiated on Tuesday, September 9, 2014. The development was the culmination of Armco Metals’ efforts to add woodchips to its trading business line portfolio.
The agreement calls for Armco International to purchase a trial shipment of around 50,000 green metric tons (±10%) of Eucalyptus Nitens woodchips from the supplier. Should this trial shipment prove successful, Armco International will move onto a one-year total importation of 550,000 to 600,000 green metric tons. With the current market price in China, 600,000 green metric tons of wood chips is worth $63MM, and Armco Metals anticipates realizing 10% gross margins on the sales of the product.
Armco Metals inked the agreement while thinking of the woodchips’ market potential in the Chinese economy. China is the world’s biggest producer of paper and paperboard. But with the lack of sufficient quantity of high-quality domestic wood fiber supply, new pulp mills in China have been looking to import greater amounts of woodchips from plantation-rich countries to meet their growing needs.
It is estimated that China’s eucalyptus plantations doubled between 2006 and 2012. However, this growth will not be enough to meet increasing demand due to challenges with frost, pests, and disease due to a very narrow genetic base. As domestic pulp production has grown, imports of woodchips to China have surged during the past few years. As a result, China emerged as the world’s leading importer of woodchips in Q2 2013.
Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, “While keep confident in our metal ore trading and recycling business, management has been making efforts to diversify our product line and develop new profitable products into our business line. With the proven ability and expertise of our team in international trading and sourcing, we have the unique advantage to expand our business scope and carry new product which offers mitigated risks and high return potential. We will capitalize on our formidable business development team to develop the new product and expand into non metal ore business that offer high growth potential, as well as higher profit margins. We look forward to providing more updates on the developments and anticipate unlocking considerable value for our shareholders.”
Mr. Yao also referenced the experience and expertise of Armco Metals’ business trading team. The team members have more than 10 years of experience in international trading business and product sourcing, with plenty of bank trading facility. They have also conducted extensive market and industry research and feasibility studies, including but not limited to: international vendor and product sourcing, shipping and logistics analysis, financing facility arrangements, and customer identification and networking.
For more information, visit: www.ArmcoMetals.com
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