According to statistics from China’s National Natural Disaster
Management System, as of August 18, heavy rains on August 11 in Sichuan have
caused damage in 19 cities and 142 districts, affecting more than 3.4 million
people. Around 165 thousand hectares of
crops were damaged, with about 20 thousand hectares area of crops destroyed.
The heavy rains in Sichuan also severely damaged around 6,000 residential
houses, with an economic loss of approximately RMB 16.4 billion.
Many listed companies in Sichuan, including Sichuan Zhenjing
Corporation Limited, Sichuan Hebang, Shenghe Resources Holding and Sichuan
Xinjinlu Group, were also affected by the heavy rains. Among the companies, Shenghe
Resources Holding suffered the greatest economic loss in the disaster.
Sichuan Hebang announced on August 19 that the company located
in Leshan City, Sichuan experienced severe flooding on August 18, and the flood
entered the production area with a high water level. The company has currently
suspended its production, with an estimated economic loss of RMB 350 million to
RMB 450 million, including RMB 70 million to RMB 90 million worth of machines
and equipment and RMB 280 million to RMB 360 million worth of inventory.
Machines
and products damaged, many factories suspend operation
According to Sichuan Hebang, the damage caused by the flood was
so high that the company was unable to evaluate a specific amount of monetary loss.
Sichuan Hebang is expected to suspend production less than three months. Sichuan
Hebang has already made a plan to resume the company’s business as soon as
possible after the temporary suspension.
For Sichuan Zhenjing Corporation Limited, the flood has caused
damage in the production area of the company’s factory, with an area of 157
thousand square meters experiencing flood damage, with a water level of around
two meters. The first floor of the production area was submerged by the flood,
and most main products and ingredients were also damaged. According to Sichuan
Zhenjing Corporation Limited, the factory affected by the flood is the
company’s main factory, whose revenue accounts for 99% of the company’s total
revenue.
Two holding subsidiary companies of Shenghe Resources Holding, Leshan
Shenghe Rare Earth Co., Ltd and Rezel Catalysts Corporation were damaged by the
heavy rains, with a total estimated economic loss between RMB 390 million and
RMB 520 million. According to Shenghe Resources Holding, Leshan Shenghe Rare
Earth Co., Ltd has suffered a loss of RMB 240 million to RMB 330 million, with RMB
20 million to RMB 50 million worth of machine and equipment damage, and RMB 220
million to RMB 280 million worth of inventory damage. Rezel Catalysts Corporation has suffered a
loss of RMB 150 million to RMB 190 million, with RMB 30 million to RMB 60
million worth of machine and equipment damage, and RMB 120 million to RMB 130
million worth of inventory damage. The specific amount of damages of the two
companies is uncertain. As of the end of the first quarter of 2020, the net
profit of Leshan Shenghe Rare Earth Co., Ltd and Rezel Catalysts Corporation was
RMB 2.37 million and RMB 6.19 million respectively, accounting for 22.11% and
21.93% of the net profit of Shenghe Resources Holding.
With
calcium carbide production halted, companies look to buy from outside sources
Sichuan Xinjinlu Group’s wholly owned company, Minjiang
Electrochemical, also encountered damage from the heavy rain. The company
reported on August 17 that floodwater entered the factory floor, damaging
products, raw materials, and equipment. The company is
currently unable to calculate the exact monetary loss caused by the flooding. Minjiang Electrochemical mainly produces calcium carbide, but
the company’s operations are temporarily suspended, and Sichuan Xinjinlu will
purchase the material from other sources in order to continue the company’s
operation.
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