Our primary raw material is bamboo charcoal. Each year, we purchase bamboo charcoal
locally that has been prepared to our specifications from between 15 and 20 suppliers
located in and around Lishui. The majority of such purchases comes from approximately
four suppliers. In recent years, due to the rising awareness of environmental
protection, the Zhejiang province is taking a series of measures to improve water
environment, which has led to a massive closure of small-sized bamboo charcoal
manufacturers. In addition, we are unable to purchase wood charcoal briquettes
from our last year’s second largest supplier, Tahe Xingzhongda Carbon Co.
in 2016, due to shortage of supply. However, we have taken actions to remedy such
matters, in particular to our primary raw material, bamboo charcoal. Therefore,
we do not expect any shortage supply from bamboo charcoal in coming years.
In addition to bamboo charcoal, we also purchase bamboo charcoal powder for use
in our EDLC carbon products. The suppliers for bamboo charcoal powder are more
limited in number, and the technical requirements of producing such powder are
higher, than those for producing bamboo charcoal. We rely on three suppliers for
bamboo charcoal powder, one of which is also a major supplier of bamboo charcoal.
Because of the technical demands of producing bamboo charcoal powder for use in
our EDLC carbon products, we expect that in the event of unavailability, we would
experience difficulty in replacing bamboo charcoal powder suppliers. While we
expect that we could instruct existing bamboo charcoal providers to produce bamboo
charcoal powder, we could experience temporary lack of availability until such
suppliers are able to produce to our specifications.
We also purchase bamboo vinegar for use in our liquid products. Our bamboo vinegar
suppliers in some but not all cases are the same as our bamboo charcoal suppliers.
As the supply of bamboo vinegar is directly related to the supply of bamboo charcoal,
we believe we have a steady supply of bamboo vinegar given the prevalence of bamboo
in the Lishui area. Accordingly, we do not anticipate any lack of availability
of bamboo vinegar for our liquid products.
We purchase wood charcoal briquettes from a supplier in Heilongjiang province
for use in our OEM BBQ charcoal products. As such products have low technical
requirements and are typically used for heating and cooking purposes, we have
found that competing on price makes purchasing wood-based charcoal for such purposes
suit our customers’ requirements. Our primary source for wood charcoal briquettes,
which we rebrand under our Algold brand for sale in China, is Tahe Xingzhongda
Carbon Co. in Daxing Anling, Heilongjiang province. In 2016, we were unable to
purchase raw material from Tahe Xingzhongda Carbon Co. It caused major decline
in our domestic charcoal briquettes sale. While we have adjusted our purchasing
strategies to look for alternatives. However, due to tightening environmental
control in local authority, we expect the cost of wood charcoal briquettes would
increase in the coming years.
In addition to our primary raw materials, we also purchase small amounts of other
raw materials, such as silver ion nano powder, fabric for charcoal bags, packaging
materials, and coconut charcoal. We do not anticipate any difficulty in replacing
the suppliers of any of such minor raw materials.
Tantech Holdings Ltd's Comment on Supply Chain
Our primary raw material is bamboo charcoal. Each year, we purchase bamboo charcoal
locally that has been prepared to our specifications from between 15 and 20 suppliers
located in and around Lishui. The majority of such purchases comes from approximately
four suppliers. In recent years, due to the rising awareness of environmental
protection, the Zhejiang province is taking a series of measures to improve water
environment, which has led to a massive closure of small-sized bamboo charcoal
manufacturers. In addition, we are unable to purchase wood charcoal briquettes
from our last year’s second largest supplier, Tahe Xingzhongda Carbon Co.
in 2016, due to shortage of supply. However, we have taken actions to remedy such
matters, in particular to our primary raw material, bamboo charcoal. Therefore,
we do not expect any shortage supply from bamboo charcoal in coming years.
In addition to bamboo charcoal, we also purchase bamboo charcoal powder for use
in our EDLC carbon products. The suppliers for bamboo charcoal powder are more
limited in number, and the technical requirements of producing such powder are
higher, than those for producing bamboo charcoal. We rely on three suppliers for
bamboo charcoal powder, one of which is also a major supplier of bamboo charcoal.
Because of the technical demands of producing bamboo charcoal powder for use in
our EDLC carbon products, we expect that in the event of unavailability, we would
experience difficulty in replacing bamboo charcoal powder suppliers. While we
expect that we could instruct existing bamboo charcoal providers to produce bamboo
charcoal powder, we could experience temporary lack of availability until such
suppliers are able to produce to our specifications.
We also purchase bamboo vinegar for use in our liquid products. Our bamboo vinegar
suppliers in some but not all cases are the same as our bamboo charcoal suppliers.
As the supply of bamboo vinegar is directly related to the supply of bamboo charcoal,
we believe we have a steady supply of bamboo vinegar given the prevalence of bamboo
in the Lishui area. Accordingly, we do not anticipate any lack of availability
of bamboo vinegar for our liquid products.
We purchase wood charcoal briquettes from a supplier in Heilongjiang province
for use in our OEM BBQ charcoal products. As such products have low technical
requirements and are typically used for heating and cooking purposes, we have
found that competing on price makes purchasing wood-based charcoal for such purposes
suit our customers’ requirements. Our primary source for wood charcoal briquettes,
which we rebrand under our Algold brand for sale in China, is Tahe Xingzhongda
Carbon Co. in Daxing Anling, Heilongjiang province. In 2016, we were unable to
purchase raw material from Tahe Xingzhongda Carbon Co. It caused major decline
in our domestic charcoal briquettes sale. While we have adjusted our purchasing
strategies to look for alternatives. However, due to tightening environmental
control in local authority, we expect the cost of wood charcoal briquettes would
increase in the coming years.
In addition to our primary raw materials, we also purchase small amounts of other
raw materials, such as silver ion nano powder, fabric for charcoal bags, packaging
materials, and coconut charcoal. We do not anticipate any difficulty in replacing
the suppliers of any of such minor raw materials.
Sources:
Tantech Holdings Ltd's official press releases and regulatory filings; CSIMarket.com's supply-chain research; and the financial filings and press releases of other companies cited in this report.
Updated on:
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