China Armco Metals Inc., Shanghai, has announced that a decision by China’s Jiangsu Provincial Government to initiate rolling blackouts for the Lianyungang enterprise zone, where the company’s Armet Renewable Resourced Co. Ltd. subsidiary operates a metal recycling site, is expected to adversely affect the company’s operations during the next several months.
By initiating the rolling blackouts, the province says it hopes to meet the Chinese central government’s industrial energy usage targets.
In a press announcement, the company says the energy restrictions will significantly reduce its recycling capabilities in the fourth quarter and negatively impact its distribution business.
“Due to the uncertainties as to the extent and duration of the current power disruptions, management cannot estimate its financial performance for the remainder of 2010 and is therefore withdrawing its financial guidance for the full year of 2010,” the company states in a press release.
Commenting on the announcement, Kexuan Yao, CEO and chairman of China Armco Metals, says, "While the government's decision to restrict power will further the negative impact on our 2010 performance and we do not have sufficient clarity to assess the full impact in 2010, we do know that it will certainly end before the beginning of 2011. We believe there will be sufficient demand in 2011 for our scrap metal to enable us to quickly recover following this interruption, and we intend to rapidly ramp up our production utilization rates in the coming quarters."
Jan. 1, 2011, China’s 12th Five Year Plan (2011-2015) will become effective, eliminating the need for the current power restrictions, the company adds.
Armco Metals is based in San Mateo, Calif.