DALIAN, China, Oct. 22, 2009 -- RINO International Corp., a leading producer of proprietary and patented wastewater treatment, desulphurization equipment, and high temperature anti-oxidation systems for iron and steel manufacturers in the People's Republic of China ("PRC"), today announced that on October 20, 2009 it entered into a contract valued at $18.4 million with the government of Dalian Development District, located on the southern tip of the Liaodong Peninsula with an area of 388 square kilometers and a population of 360,000.
Under this contract, the Company will provide and install its Rotary Drum Film Dryer ("DWM") sludge treatment system in the Dalian Development District in two phases. The first phase has a contract value of $9.6 million and will commence in December 2009. The new sludge treatment system is expected to initiate operations by July 2010 and will achieve a processing capacity of 200 tons per day. After the $8.8 million second phase installation, which will commence in September 2010 and is expected to be online by February 2011, the processing capacity of the sludge treatment system will increase by an additional 200 tons per day. After the evaluation of various technologies and systems in the current market by the Dalian Development District Government for more than a year, RINO's DWM sludge treatment system was chosen for deployment. The gross margin associated with this contract is expected to be consistent with the margins achieved in RINO's existing business.
Zou, CEO and founder of RINO, stated, "We are extremely pleased to secure this contract which marks the official commercialization of our new energy efficient sludge treatment system. Developed in cooperation with the Dalian University of Technology, RINO's new sludge treatment system can be used to effectively process sludge generated during the municipal wastewater treatment process, in addition to sludge by-product created through various industrial and oil production processes. We estimate that the addressable market for this product in China is approximately $28.8 billion with municipal wastewater being a meaningful component and the principal growth driver during the next few years. This is significantly larger than the market for our desulphurization products."
To treat sludge, the first and most critical step is to remove water through a dehydration process, which condenses the sludge and allows it to be incinerated. Depending upon the heavy metal content in the processed sludge, the final product can be used as agricultural fertilizers, or, after further processing, a component in various construction materials. Such by-products of the sludge treatment system will create an additional revenue source to help offset the ongoing maintenance costs of the sludge treatment systems.
RINO's DWM sludge treatment technology, using superheated steam to dehydrate sludge, is able to reduce the water by 10% more than other treatment technologies that are now widely used in the PRC. In addition, the Company believes that the installation costs of its sludge treatment system are approximately 50% less than those installed with imported products and the daily operational costs are approximately 45% less.
The Chinese government recently promulgated a new regulation requiring at least 60% of municipal wastewater to be treated by 2010, which is expected to significantly increase the demand for proper sludge processing in China over the next several years. To achieve this goal, the government plans to increase the capacity of sludge processing to 30 million tons per year. Overall, RINO estimates that more than $500 billion in related construction costs and investments would be necessary in China to meet these objectives. RINO Management estimates that the cost to the municipality of processing one ton of sludge will vary from $12 to $19, depending on the steam source from its DWM treatment technology.
Dalian University of Technology has submitted a patent application in China for the Rotary Drum Film Dryer technology in China (Application number: 200710011115.0). Based on its exclusive license agreement with Dalian University of Technology, Dalian Rino, RINO's subsidiary in China, will pay an ongoing royalty of approximately 5% of sales to Dalian University.
About RINO International Corporation
RINO International Corporation, through its direct and indirect subsidiaries, including Innomind Group Limited and Dalian Innomind Environment Engineering Co., Ltd., its contractually-controlled affiliate, Dalian RINO Environmental Engineering Science and Technology Co., Ltd. ("Dalian Rino") and Dalian Rino's wholly-owned subsidiaries, Dalian Rino Environmental Engineering Project Design Co., Ltd. and Dalian Rino Environmental Construction & Installation Project Co., Ltd., is a leading provider of environmental protection equipment for the iron and steel industry in China. Specifically, RINO designs, manufactures, installs and services proprietary and patented wastewater treatment, flue gas desulphurization equipment, and high temperature anti-oxidation systems, which are all designed to reduce either industrial pollution and/or improve energy utilization. RINO's manufacturing facility maintains the ISO 9001 Quality Management System and ISO 14001 Environment Management System certifications, in addition to receiving numerous government and industry awards. Additional information about the Company is available at the Company's website: http://www.rinogroup.com.
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