COFCO Biomaterials introduces state-owned investment to promote the construction of an annual output of 30,000 tons of lactide

Latest News: On the evening of September 12, COFCO Technology issued an announcement that its subsidiary COFCO Biomaterials (Elm) Co., Ltd. (hereinafter referred to as “COFCO Biomaterials”) introduced strategic investors. A consortium consisting of Investment Holdings Co., Ltd. (hereinafter referred to as “Aerospace Investment Holdings”) and Shaanxi Guohua Fusion Industrial Development Fund Partnership (Limited Partnership) (hereinafter referred to as “Guohua Fusion Industrial Fund”) acquired a 49% stake in COFCO Biomaterials , and jointly promote the construction of the company’s 30,000 tons/year lactide project to break through the bottleneck of the core link of bio-based degradable materials and promote the localization of key equipment. After the completion of the equity transfer, COFCO Technology still holds a 51% stake in COFCO Biomaterials.

With the increase of the global plastic restriction order, the production capacity of the bio-based degradable polylactic acid (PLA) industry continues to expand, driving the demand for the key intermediate lactide to rise. Affected by the previous continuous supply interruptions around the world, the current supply of lactide is still in a state of high shortage, and the superimposed technical barriers are relatively high. COFCO Technology has repeatedly stated that due to the shortage of raw material supply of lactide, the company’s existing PLA plants are not producing at full capacity. At present, the main procurement channels are domestic lactide manufacturers, and imported lactide is still hard to find.

In order to realize the self-sufficiency of raw materials and the integration of the industrial chain, COFCO Technology announced in September 2021 the establishment of a subsidiary in Yushu, Jilin, with an annual output of 3
The 10,000-ton lactide project, to support the existing PLA production line, has a total investment of 587 million yuan, and the construction period from the date of project approval to the successful commissioning of the project is 24 months. In December 2021, COFCO Biomaterials, the main body of the project, was established and started to introduce strategic investors.

The strategic investors Aerospace Investment Holdings and Guohua Fusion Industrial Fund introduced this time are all state-owned holding companies. Among them, Aerospace Investment Holdings Co., Ltd. is an investment management entity authorized by China Aerospace Science and Technology Corporation. The investment field focuses on satellite applications, electronic information products and Services, aerospace special equipment and materials, energy-saving and environmental protection equipment and other strategic emerging industries closely related to the application of aerospace technology. According to the equity transfer agreement, since COFCO Biomaterials has not yet started business and 49% of the equity in this transaction has not been paid in, the equity transfer price is 1 yuan, of which Aerospace Investment Holdings paid 0.54 yuan and received 26.67% of the equity; the remaining 22.33 % of the equity is undertaken by Guohua Fusion Industrial Fund, and the two must complete the actual payment obligations according to the shareholding ratio before December 31, 2023, and the corresponding capital contributions are 80 million yuan and 67 million yuan respectively.

In fact, in previous investor surveys, COFCO Technology has repeatedly disclosed the purpose and logic of introducing strategic investment: first, to achieve localization of core equipment; second, to expand application fields, especially high-end fields. It is reported that the installation and commissioning of the lactide project equipment does not take long. Most of the 2-year construction cycle is for equipment selection and customization in the early stage, and the core equipment is imported from abroad. COFCO Technology said that it has conducted in-depth discussions with relevant companies on the design and selection of core equipment. It is expected that the contract will be signed around the end of September. When the preliminary preparations are basically completed, the construction phase will begin immediately.