Gulf Resources announced that it has received the equipment it ordered for its natural gas project. It is completing the installation and will soon commence testing. The first major piece of equipment is the natural gas separator. This equipment separates dust, dirt, sand and pipe scale, water, high octane value hydrocarbon, etc. The gas collects at the top of the natural gas separator where it is removed and decompressed. Separators often have to be customized to treat the specialized conditions of each drilling area. The second major piece of equipment is the water jacket furnace. It maintains an even temperature, while saving significant amounts of energy and reducing emissions. This equipment can heat up the natural gas to ensure the normal operation of the following equipment. The installation, including providing piping and electricity will be completed in July. The company hopes to begin testing in August and trial production in September.
Gulf Resources announced a further temporary delay in the opening of its bromine plants situated in Shandong Province, China. On June 29, the company received a formal notice issued by various provincial government agencies in Shandong Province setting forth further requirements and procedures covering the following four aspects for the chemical industrial enterprises which includes the bromine plants: project approval, planning approval, land use rights approval and environmental protection assessment approval. The company believes that the government will not grant approval to open the company's plants until it has fully complied with the aforesaid rules set forth in the notice. The company is not certain how long the temporary delay will be due to the discussions between Shouguang City Bromine Association and local government agencies. The company does not anticipate that its new chemical factory will be significantly impacted by the Notice. However, the company does believe there could be a delay for the approval process given the ongoing rectification and approvals process for its other plants.
Gulf Resources announced updates to the rectification of its bromine business. In the beginning of January, 2018, Liu Xiaobin, the President and CEO, Li Min, the CFO, Miao Naihui, the COO, went on an inspection tour of the bromine plants accompanied by a U.S. based consultant. The consultant took photographs of the facilities and wrote a report accompanying the photographs. The U.S. based consultant stated in the report, "As can be seen from the photos in this report, Gulf Resources has spent a considerable amount of money in the past two months in performing the rectification of its bromine mines and factories. While there are no guarantees, management feels confident that the government will approve the rectification of the factories and mines. The company still believes it will be able to begin bromine operations step by step shortly after the Chinese New Year."
Gulf Resources announced the closing of its bromine, crude salt and chemical factories for rectification and improvement in order to meet the new environmental rules in China. "At this time, Gulf Resources does not know the timing of further inspections or the cost of remediation and improvement that will be required, nor does the company know how long the factories will be closed. Until the Company understands the full implications and timing of these issues, it will not be able to provide any estimates as to the impact on either earnings or capital expenses. However, the company is currently in discussions with the county and city governments to resolve these issues as rapidly as possible. While the company does not yet know all of the issues that might be involved, Gulf believes that with respect to its Bromine production that it may have to purchase new equipment and utilize more modern technology in order to increase utilization; Converting the material used for energy from coal to natural gas, electricity, or solar power; develop better waste water treatment, and invest in equipment that minimizes emissions. While there is no way of knowing at this juncture how much all of these steps will cost, the company believes it could be between $15M-$30M," the company said.