Chinese manufacturer will use Amerityre retreading process

Aug. 22, 2006

Amerityre Corp. has entered into a manufacturing license agreement with Qingdao Qizhou Rubber Co. Ltd. in Qingdao, China.

The agreement grants the Chinese company a license to manufacture polyurethane elastomer retreads for three large-size mining tires using Amerityre's retreading process. In exchange, Qingdao Qizhou will pay Amerityre a $400,000 license fee payable over the next two years.

According to Amerityre, Qingdao Qizhou Rubber Co. proposes to build a new factory next to its existing operations in the Mingcun Rubber Industrial Park located in Pingdu, China. Amerityre will sell "and otherwise assist" Qingdao Qizhou in obtaining the necessary equipment for the factory and supply the chemicals necessary to produce the polyurethane elastomer retreads.

The parties estimate that it will take approximately 12 months to complete the factory, which is expected to have an annual retread capacity between 7,200 to 10,000 units. The plant would use between 7.7 million and 16.5 million pounds of polyurethane elastomer material annually, based on the production mix.

"The increasing demand for natural resources by emerging countries has caused a global shortage of large OTR mining tires," says Amerityre President Ken Johnsen. "There have been reports of mining equipment sitting idle, without tires. We've been evaluating the scalability of our retreading technology in the OTR tire area and there is a substantial opportunity there."

Established in 1998, Qingdao Qizhou Rubber Co. manufactures agricultural, light truck, heavy truck and OTR tires for export to more than 20 countries under the brand names Gold Wheel and Broadway. The company has annual sales of $100 million.