Armco Metals Holdings, Inc. ("Armco Metals Holdings"), a U.S. based company that engages in the import, sale, and distribution of metal ore and non-ferrous metals in the People's Republic of China, recycles scrap metals used by steel mills in the production of recycled steel and provides sourcing and pricing services for various metals to its network of customers, today announced that its Armco (Lianyungang) Renewable Metals, Inc. subsidiary ("Renewable Metals") has entered into a steel scrap supply agreement with Mitsui & Co. (Shanghai) Ltd. ("Mitsui Shanghai"), a wholly owned subsidiary of Mitsui & Co., Ltd., ("Mitsui & Co.") whose business covers energy, machinery, chemicals, food, textile, logistics, finance, and more on a global scale.
Under the terms of the agreement, Renewable Metals will serve as Mitsui Shanghai's vendor for sourcing, processing and supplying scrap metals with various specifications and standards. Mistui Shanghai has also agreed to advance payment for the joint purchase of raw materials and complete final purchase of the steel scrap upon completion of processing services. This newly applied purchasing business model for Renewable Metals is designed to better enforce its supply agreements with customers and lower business risk.
As a subsidiary of one of the largest general trading companies in Japan, Mitsui Shanghai has estimated purchase plans for approximately 15,000 to 20,000 metric tons of steel scrap on a monthly basis. In addition to the potential for significant recurring revenue, the advance purchase terms of this agreement will help to substantially improve cash flow for funding Armco Metals Holdings' daily operations and future expansion plans. Armco Metals Holdings sees this relationship with Mitsui Shanghai having further expansion opportunity for the company into Japan and other potential markets throughout the world due to Mitsui & Co.'s global industrial distribution footprint.
Commenting on the announcement, Kexuan Yao, Chairman and CEO of Armco Metals Holdings, stated, "We look forward to a successful partnership with Mitsui & Co. as we expand our steel scrap distribution channels to Japan. We appreciate this opportunity to establish a long term business relationship with one of the largest general trading companies in the world, and we intend to work diligently to support Mitsui & Co. in their efforts to help us achieve significant sales growth in fiscal 2014 and beyond."