Glucose and maltose syrup supplier Global Sweeteners receives the green light to acquire Jinzhou Yuancheng Bio-chem Technology, thereby securing supplies for corn starch, the key raw material in its sweetener production.
The Hong-Kong listed firm, one of the largest corn sweeteners producers in China with an annual production capacity in excess of one million tons, received approval from independent shareholders of Global Sweeteners Holdings (GSH) regarding the sale and purchase agreement entered into with its parent company, Global Bio-chem Technology.
Approval enables GSH to acquire the entire interest in Jinzhou Yuancheng Bio-chem Technology that makes and sells corn starch and corn refined products.
In a recent announcement, GSH said the transaction "is strategically beneficial as it allows GSH to secure stable supply of a key production material for its production facilities in Shanghai and Jinzhou going forward."
Further, the firm anticipates cost savings through the agreement.
"The vicinity of Jinzhou Yuancheng’s production plant to the GSH group's new sweeteners production facility in Jinzhou enables Jinzhou Yuancheng to supply corn starch to such new sweeteners production facility in slurry form through a pipeline arrangement, whereby certain processing, packaging, dehumidifying, storage, transportation and other related costs can be saved," the directors of GSH said in the statement.
In addition, GSH claims that such vertical integration along the chain of production group also places it in a better position to "effectively apply quality control procedures and to monitor and control the production flows of both corn starch and corn sweeteners, thereby minimising the chance of bottlenecks or inventory pile-up, and related administrative costs."
Commonly used in food and drink applications, the global market for sweeteners as additives used by food manufacturers, as opposed to table-top, came in at around $1.83bn (€1.23bn) in 2007, according to recent data from Leatherhead's report 'The food additives market: Global trends and developments'.
Growth for food-use in the market is hardly strident, with data from the report stating the market is growing only slowly in value terms, rising by a small 1.1 per cent in 2007. Future growth will be intimately linked to the growing appeal from food makers for low and no-sugar foods. Leatherhead slates growth in market value at around two per cent until 2010.
The majority of sweeteners used by the food industry is in the bulk form, according to Leatherhead, some 680,000 tonnes used globally in 2007, compared to 80,000 tonnes for intense sweeteners.
Moving towards its aim of becoming a leader in the Asian and worldwide markets for corn sweeteners, earlier this year Global Sweeteners Holdings bought out Mitsui's share of their sorbitol joint venture.
Global Sweeteners formed the joint venture for a sorbitol plant in Changchun, China, with Japan's Mitsui February 2004. At the outset it owned 51 per cent to Mitsui's 49 of the company, called Global-Nikken (Hong Kong). Announced in January this year, GSH said acquiring the Mitsui slice of the firm for US$2.5m, would help improve efficiency and management flexibility. The plant has the capacity to produce some 60,000 tons of sorbitol per year.