Investigation Results From Report
on Chinese Extruder Zhongwang
One of the world’s largest aluminum extruders is on the defense after a report accused it of committing “the largest and most complex China fraud ever uncovered.”
In a 51-page report, short seller Dupre Analytics alleges China Zhongwang Holdings Ltd. chairman Liu Zhongtian and his family have constructed a “network of proxies and intermediaries outside of China, and used them to secretly set up entities and aluminum processing facilities that span the globe.”
The report accuses Liu of inflating Zhongwang’s sales over the past four years by shipping out semi-finished aluminum products from China to companies Liu and people close to him control overseas, where the material allegedly was reprocessed back into aluminum billet and sold again.
Zhongwang, which has a market capitalization of $2.3 billion (HK$18 billion), said in a filing to the Hong Kong Stock Exchange that the allegations were “groundless or untrue.” While the company had suspended its share trading, it has since resumed and has also issued a point-by-point response to the report’s allegations.
The detailed report outlines an alleged scheme in which “Chairman Liu and his family systematically defrauded investors, fabricating at least 62.5 [percent] of revenue since 2011 and likely skimming billions of [capital expenditure] from the delayed facility in Tianjin.”
The Aluminum Extruders Council (AEC) called on the governments of China, Vietnam, Malaysia, Mexico and the U.S. to investigate the charges.
“If proven to be true, these allegations make it clear that Zhongwang investment and penetration into North American and Asian markets has been built on a house of cards,” says Jeff Henderson, director of operations at AEC. “Our industry has read about and seen the pictures of the one and a half billion pounds of extrusions that were shipped into Mexico only to be re-melted into billet. That program never made economic sense to anyone in the industry. How can it be profitable to convert ingot into billet, then extrude it, then ship it across the Pacific Ocean to Mexico, only to re-melt into billet again?”
Zhongwang was one of the companies named in the U.S. investigation of the dumping of Chinese extruded aluminum in 2011, which prompted duties to be imposed on the material’s importation. Since then, at least two related transshipment cases have surfaced.
With a reported significant increase in aluminum exports from China, decreased prices in the market and more extrusions coming into the U.S., Henderson says U.S. manufacturers importing extrusions must be diligent in confirming that what they’re purchasing is actually coming from where the seller says it’s coming from, as buyers could still be held accountable for their involvement in the “schemes” despite being given false information.
The AGC Glass Europe plant in Zeebrugge, Belgium, hosted a 90th anniversary celebration in September. Attendees included Geert Bourgeois, minister-president of Flanders, as well as other politicians, industry representatives and press members.
According to AGC, its Zeebrugge site is the world’s largest producer of mirror glass. It also houses the double glazing department of AGC Fabrication Belgium-Seapane, which also celebrated its 40th anniversary in September. The site currently employs approximately 210 people.
“The development of the Zeebrugge site is synonymous with sustainable innovation, an approach that also lies at the root of the economic success and corporate social responsibility,” says Jean-François Heris, CEO of AGC Glass Europe.
AGC’s Zeebrugge site, a producer of mirror glass, celebrated its 90th anniversary in September.
Vitro to Expand Production Capacity for Flat Glass
Vitro, the Mexico-based glass manufacturer, is expanding its flat glass production capacity with the addition of a fourth furnace that is expected to be operational by 2017. The company also announced that its furnace operating in Mexicali will enter a repair phase in mid-2016, further expanding capacity.
Net investment for the expansion will be approximately $85 million, according to the company.
Lisec Breaks Ground at Service and Training Center
Construction is now underway on Austria-based Lisec’s new service and training center at its production site in Seitenstetten, Austria. The site will include a 12,900-square-foot machine hall and a 10,200-square-foot office wing.
“With its finger on the pulse of the time, the new service and training center, which is equipped with the latest infrastructure, meets the global requirements of our customers,” says Peter Rattinger, head of the service department.
The facility could open by the end of 2015.
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