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Yongye International, AŞ Message Board

  • bonalcharles bonalcharles Jun 15, 2012 11:56 AM Flag

    Yongye International Raw Material Production.

    Raw Materials and Production as of 10q report dated Form 10-Q on 10-May-2012.
    Yongye's product's core compound fulvic acid is extracted from humic acid. Humic acid is formed by biodegradation of dead organic matter which is buried and compressed under soil, and humic acid is mostly contained in peat, lignite coal, leonardite coal, etc. Our production process primarily involves the extraction of fulvic acid and then blending it with macro and micro nutrients based on our patented formulae. The molecular structure of fulvic acid is smaller than humic acid, which enables fulvic acid to be more easily absorbed by crop leaves.
    Currently, our key raw materials for fulvic acid are lignite coal and humic acid purchased from third party suppliers, and the prices of lignite coal and humic acid are affected by factors such as market demand, quality and transportation cost. The humic acid we use comes from top grade lignite coal which is mined in Inner Mongolia and is typically sold on a per ton basis. We currently procure lignite coal from independent third party suppliers in Inner Mongolia for our manufacturing needs. Prior to 2011, the key raw material for our products was humic acid which was procured from third party suppliers. Upon the completion of our Wuchuan Facility at the end of 2010, we have been able to produce the majority of our products by extracting fulvic acid in-house from lignite coal and no longer completely rely on humic acid from intermediaries. Other raw materials used in our products include chemicals used in our extraction and blending processes as well as macro and micro nutrients. Fluctuations in raw material costs will affect our cost of sales and gross profit margin, and we may not be able to pass such increased costs on to our distributors and then to our end customers.
    Currently, we procure lignite coal from independent third party suppliers in Inner Mongolia. In March 2010, in order to secure long-term supply of humic acid, we entered into an agreement to acquire a mineral resource project in Wuchuan County, Inner Mongolia. In August 2011, Yongye Fumin, our wholly-owned subsidiary, obtained a Mineral Resource Exploration Permit for this project site in Wuchuan County, Inner Mongolia, which was issued by the Inner Mongolia Ministry of Land and Resources. Such approval granted us exclusive exploration rights for this project site for an initial period of three years beginning August 2, 2011. We are in the process of applying for the governmental approval for the Mineral Right and are preparing for the relevant reports, including but not limited to a Geological Report and a Geological Exploration Report. Upon the granting of the Mineral Right, we will be able to further vertically integrate our operations.
    Currently we have a total of 46,000 tons of combined annual design production capacity at the Wuchuan Facility and the Jinshan Facility. The major production processes for our crop and animal nutrient products are identical, and therefore production capacities for the two products to a large extent are inter-changeable.
    Because of the proprietary nature of our products and manufacturing processes, we customized the core production components of our manufacturing facilities to enable capacity flexibility. Our design capacity is calculated by us based on key assumptions, including 300 days of operation in a year and normal manufacturing conditions. Under actual manufacturing conditions and based on the seasonality in our business, our production facilities have the flexibility to adjust actual production to levels higher than our stated theoretical design capacities. For instance, during the past several years, our production outputs during the peak second and third quarters have consistently exceeded the design capacity.
    .MMM lets see a 10Q report or RxR BS?

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    • Outstanding Post Charley. That last paragraph really explains a lot.

      "Because of the proprietary nature of our products and manufacturing processes, we customized the core production components of our manufacturing facilities to enable capacity flexibility. Our design capacity is calculated by us based on key assumptions, including 300 days of operation in a year and normal manufacturing conditions. Under actual manufacturing conditions and based on the seasonality in our business, our production facilities have the flexibility to adjust actual production to levels higher than our stated theoretical design capacities. For instance, during the past several years, our production outputs during the peak second and third quarters have consistently exceeded the design capacity."

      Keep those posts coming and we'll be off to the moon:)

    • bon: Thank for paying attention to my posts! Now, why does a government report on Yongye's Wuchuan facility fail to mention any material handling facilities for extracting fulvic acid from coal? It only mentions a boiler than burns a bit of coal - for heating the shrine. Or did I misread the government report?

 
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