SIIC Environment sets up $199m joint venture for waste-to-energy business in Shanghai

SINGAPORE - Mainboard-listed SIIC Environment Holdings on Monday (Sept 30) said it has formed a joint venture (JV) company with Baowu Environment with 1.1 billion yuan (S$198.9 million) in registered capital.

Independent third party Baowu Environment is an environmental pollution treatment company and a member of the China Baowu Steel Group Corporation.

The JV, which was incorporated in China on Sept 27, is called Shanghai SIIC Baojin'gang Environmental Resources Technology Co Ltd. Its business activities will involve power generation, waste management and the processing and sale of slag products.

The JV was also formed in order to allow SIIC Environment to expand its waste-to-energy (WTE) business and explore potential WTE business opportunities in Shanghai. The JV will also allow the group to better serve urban industrial zones in functional transition and escalation.

The formation of the JV was done through the group's 70 per cent indirectly-owned unit SIIC Yangtze Delta and will see the unit taking a 60 per cent equity interest worth 660 million yuan. Meanwhile, Baowu Environment will take the remaining 40 per cent stake, with a 440 million yuan contribution.

SIIC Environment added that its directors - which include its independent non-executive directors - believe the agreement is on "normal commercial terms" and "fair and reasonable".

The deal is also not expected to have a material effect on the net tangible assets or earnings per share of the group for the fiscal year ending Dec 31.

The counter last closed on Friday at $0.245, up one cent or 4.3 per cent.