MRO Magazine

Yulong Signs 25-Year Exclusive Hauling & Recycling Agreement for Shangqiu City


October 5, 2015
By Business Wire News

PINGDINGSHAN, China

Yulong Eco-Materials Limited (NasdaqCM:YECO), an eco-friendly building products and construction waste recycling company, today announced it has received an exclusive 25-year contract from Shangqiu City in Henan Province to haul and recycle construction waste within a 77 square-mile section of that city’s metro area, and that it expects to commence work on the contract this month.

Under the contract, signed with the City Management Bureau of Shangqiu City, Yulong is entitled to receive from the Bureau a fee of 22 RMB, or approximately $3.45, for each metric ton of waste the company collects. According to the Bureau, the contract area is expected to generate over two million metric tons of construction waste per year for the foreseeable future, giving potential revenue to Yulong of about $7 million annually or $170 million over 25 years.

As per the contract, Yulong shall also have the right to sell all recycled waste materials to third parties for use in local construction projects, a process that is expected to generate significant incremental revenue for the company over the life of the contract.

Also per the contract, the Bureau will help Yulong apply for all applicable Central Government subsidies available for those companies furthering the use of recycled building materials in city construction projects. In addition, the Bureau will help Yulong promote the sale of its recycled waste materials to local third parties.

The agreement stipulates that in order to maintain its role as Shangqiu’s exclusive service provider, Yulong must 1) have the land for recycling the construction waste fully secured and ready for use by March 18, 2016; 2) provide hauling trucks and have a recycling production line and necessary auxiliary facilities ready by March 18, 2017; and 3) process at least 90% of the construction waste generated within the contract area during each year of the contract.

As directed by the Bureau, Yulong is currently in the process of establishing a locally registered subsidiary, under its Yulong Renewable division, to which the Bureau will issue the relevant licenses required by the contract. This process, though required to be completed by March 18, 2016, will likely be completed within 60 days and will not delay or prevent the company from commencing work on the contract this month.

Today’s news follows Yulong’s August announcement that it had secured an agreement to provide waste hauling and recycling operations on a high-speed rail project in Shangqiu, and a September announcement that the company had landed a construction waste agreement for Zhengzhou City.

Those two agreements have combined potential project revenue of $39 million over four years.

“We are excited to have secured this newest hauling and recycling agreement in Shangqiu,“ said Yulong CEO Mr. Yulong Zhu. “This 25-year contract is not only an endorsement of our company’s skill and resources in efficiently hauling and recycling urban construction waste, it is also further evidence that we are successfully branching out from our base in Pingdingshan and securing substantial long-term agreements that should steadily improve our top and bottom line performance for this fiscal year and others to come.”

About Yulong Eco-Materials

Yulong is a vertically integrated manufacturer of eco-friendly building products and a construction waste recycling company located in the city of Pingdingshan in Henan Province, China. The company is currently the city’s leading producer of fly-ash bricks and concrete, and in April 2015 became Pingdingshan’s exclusive hauling and construction waste recycling operations provider.

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