Update on China Direct Industries’ Magnesium Facilities

China Direct Industries, Inc. ("China Direct Industries") (NASDAQ: CDII), a U.S. owned holding company operating in China in two core business segments, magnesium production and distribution of basic materials, today provided an update of the status of production at its magnesium production facilities.

As referenced in our May 7, 2010 press release, we began the process to restart production at our Chang Magnesium and Baotou Changxin Magnesium facilities due to improving demand. For the vast majority of fiscal 2010, production was idled at all of our facilities with the exception of Golden Magnesium's annual capacity of 12,000 metric tons. Golden Magnesium was running near full capacity by the end of the third quarter of fiscal 2010 and remained at or near full capacity in the fourth quarter of fiscal 2010.

As of today's date our Chang Magnesium facility now has 10,000 metric tons of annual available production capacity and Baotou Changxin Magnesium has available 6,000 metric tons of annual production capacity. This brings our current annual magnesium production capacity for fiscal 2011 to 28,000 metric tons. Management expects to ramp up overall capacity utilization rates and continue to restart additional furnaces at our Baotou Changxin facility to reach its full production capacity of 24,000 tons per year before the end of fiscal 2011, provided that overall demand continues to improve. This would bring available production capacity back to 46,000 metric tons at these three facilities. Our recently acquired Ruiming Magnesium facility will also enable us to produce 5,000 metric tons of magnesium powder on an annual basis.

Commenting on China Direct Industries magnesium segment, Dr. James Wang Chairman and CEO of China Direct Industries, Inc. stated, "Recently, magnesium spot price has been rising to approximately $3,000 per ton FOB China early in October 2010 as compared to prices closer to $2,500 this same time last year. As the aerospace, automobile and consumer electronics industries continue to recover, we are seeing demand for magnesium improving throughout 2011and we have adjusted our production forecast accordingly. We believe our magnesium segment is now emerging from a prolonged downturn as a stronger player relative to our competitors. With firming prices returning to more normalized levels we are confident that our magnesium operations will not only grow substantially from a revenue standpoint in fiscal 2011 but also profitably at the bottom line. We intend to continue with our plan to acquire additional magnesium production facilities as conditions warrant, and are confident that we will reach our goal of becoming the largest producer and distributor of magnesium products in the world by fiscal 2012."

Source: http://www.cdii.net/

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