Fu Jie, Chairman of NINGKE

According to a report by the Shanghai Securities Journal (reporter Yu Yao), as a functional product, long-chain dicarboxylic acids are widely used in numerous high-tech material fields, including advanced energy, new-energy vehicles, chemical industry, light industry, agriculture, pharmaceuticals, military industry, and aerospace. To make the production process of long-chain dicarboxylic acids more environmentally friendly, Ningxia Zhongke Biotechnology Co., Ltd. (hereinafter referred to as “*ST NINGKE” or “NINGKE”) has continuously researched and iterated its “biological” production technology. By adopting an aqueous-phase purification process, the company has eliminated the use of chemical solvents throughout the entire production cycle, thus driving the development of synthetic biology toward innovation and green practices. Recently, a reporter from the Shanghai Securities Journal visited *ST NINGKE on-site and had a face-to-face conversation with Fu Jie, the company’s chairman, delving into how the enterprise is leveraging technological innovation, expanding production capacity, and implementing restructuring measures to broaden its growth prospects, improve operational efficiency, and actively strive to return to a path of healthy development.

Lead innovation

NINGKE’s predecessor, Ningxia Xinri Hengli Steel Wire Rope Co., Ltd., was listed on the Shanghai Stock Exchange in 1998. After the company’s core business underwent a transformation in 2017, it built in Shizuishan City, Ningxia, a project with an annual capacity of 50,000 tons of lauric diacid—a type of long-chain dicarboxylic acid—as well as a joint R&D base for lauric diacid. Building upon the industrial-scale production technology for long-chain dicarboxylic acids developed via biological methods at the Institute of Microbiology, Chinese Academy of Sciences, the company has continuously carried out comprehensive system optimization throughout the entire process. Today, it has established a third-generation, large-scale bioprocess technology for long-chain dicarboxylic acids that boasts independent intellectual property rights.

“Long-chain dicarboxylic acids are fine chemical intermediates and also one of the key products in bio-based new materials. In the past, the primary production technology was chemical synthesis, but the current trend is shifting toward biological methods—specifically, biofermentation,” said Fu Jie. He added that the company’s most distinctive feature lies in its use of water rather than chemical agents during extraction and purification, opting instead for an aqueous-phase extraction method that is more environmentally friendly.

With the global focus on green chemistry and sustainable development, the production processes for long-chain dicarboxylic acids are continuously being optimized and innovated, moving toward greater efficiency, environmental friendliness, and sustainability.

“We’ve conducted a large number of innovative experiments, building on the technological foundation established by the Institute of Microbiology at the Chinese Academy of Sciences and continuously innovating further. Through ongoing technological iterations, we’re steadily unlocking the high-value potential of downstream products,” said Fu Jie. He added that the company’s proprietary aqueous-phase purification process is its core competitive advantage. Not only does this process ensure that the entire production cycle is free from organic solvent contamination, but it also yields higher-quality products with purity levels reaching polymer-grade standards. As a result, the process can be widely applied in high-value-added fields such as high-performance materials, specialty nylons, fragrances, and pharmaceutical intermediates, meeting the demands of high-end customers.

Biofermentation generally involves two main processes: biofermentation itself and extraction and purification. As the fermentation level at the front end improves, the extraction yields at the back end will also increase accordingly. To this end, NINGKE has developed an integrated, categorized processing solution for its production technologies. By adopting sustainable practices, it continuously enhances the production efficiency of core units, ultimately driving down the specific consumption rate of each unit.

“For example, in the production process, a single tank—containing 350 tons—is the smallest fermentation unit. The fermentation process itself consumes energy. If fermentation efficiency is improved, the amount of product produced per tank will increase, thereby reducing the energy consumption per unit of product,” said Fu Jie. “This necessitates continuous technological upgrades and the introduction of new equipment to keep pace. Therefore, each technological upgrade can be divided into two components: technological improvements and equipment upgrades—but the relative proportions of these two components may vary.”

Currently, NINGKE’s fermentation yield efficiency is at the leading level in the industry. Compared with traditional chemical synthesis methods, the company has continuously reduced both the raw material consumption and energy intensity per unit of product during the production process. This not only lowers production costs but also enhances the environmental performance of the production process.

Turn around and escape from difficulties

In June of this year, NINGKE’s holding subsidiary—Ningxia Zhongke Bio-new Materials Co., Ltd.—launched a technological upgrade project for bio-fermentation products with an annual capacity of 110,000 tons, investing approximately 100 million yuan on top of its existing 50,000-ton-per-year long-chain dicarboxylic acid production line.

“This round of technological upgrading and transformation is primarily focused on upgrading and modernizing our existing production lines, enabling the company to develop integrated production capabilities for a diverse range of products—including long-chain dicarboxylic acid series, bio-fermentation functional product series, bio-food series, and amino acid series—thus making our product lineup more abundant and diversified,” said Fu Jie.

Specifically, through industrial upgrading, NINGKE is expected to build four flexible production lines, including a flexible production line for long-chain dicarboxylic acids with an annual output of 18,000 tons, a flexible production line for bio-fermentation functional products with an annual output of 5,100 tons, a flexible production line for bio-food products with an annual output of 63,000 tons, and a flexible production line for amino acid products with an annual output of 24,800 tons.

Fu Jie explained that the purpose of expanding production capacity is to better adapt to market demands, diversify the product portfolio, and enhance product competitiveness. At the same time, this will help enterprises reduce losses, optimize the future competitive landscape, improve profitability, and strengthen their overall competitive capabilities.

Currently, the global dicarboxylic acid market is on a growth trajectory, and it is expected to maintain relatively rapid growth in the coming years. Since the fourth quarter of last year, Ningxia Zhongke Bio-new Materials Co., Ltd. has seen stability in its supply, sales, production, and personnel; its production capacity has been gradually released, and the specific consumption of raw materials per unit of product has continued to decline. Although the company has yet to turn a profit due to historical burdens, it has managed to prevent further widening of its losses.

“In the first half of this year, the company’s main business revenue reached 216 million yuan, representing an 89.95% year-on-year increase. Although net profit attributable to shareholders remained at a loss of 171 million yuan, the loss amount decreased compared to the same period last year. Currently, the company’s production and operations are running normally, and its historical burdens are being gradually resolved. We are striving to eliminate the risks associated with the delisting warning and the risks stemming from past regulatory violations,” said Fu Jie.

In addition, NINGKE Biotechnology owns its own power plant, giving it advantageous conditions for integrated internal production of heat, electricity, and steam (gas). After further capacity expansion, it will be able to achieve self-sufficiency, truly realizing the coordinated operation of heat, electricity, and steam (gas), thereby more effectively reducing production costs.

Reorganize and be reborn

Not long ago, *ST NINGKE issued an announcement stating that the court had ruled to accept the company's reorganization and appointed a temporary administrator to serve as its manager.

“The company’s total debt stands at 2.268 billion yuan. Currently, the company is working closely with the administrator and major creditors to discuss the restructuring plan, striving to secure their support for the plan as soon as possible. Ultimately, we aim to leverage the bankruptcy reorganization of Ningxia Zhongke Bio-new Materials Co., Ltd. to facilitate the bankruptcy reorganization of the listed company,” said Fu Jie.

Currently, *ST NINGKE is taking a series of “combined measures” to actively return to the track of healthy development. Fu Jie told a reporter from the Shanghai Securities Journal that the judicial restructuring process can thoroughly resolve ongoing operational risks as well as debt risks. If the company’s restructuring is successful, the combined investment from industrial investors and financial investors will exceed 1.2 billion yuan.

The reporter learned through interviews that recently, *ST NINGKE has supplemented its frontline production staff and boosted employee morale. By actively raising funds through the distress-relief platform, the company is providing financial support to resume production and operations. At the same time, NINGKE is actively coordinating with key suppliers and major customers to restore the commercial credit of Ningxia Zhongke Bio-new Materials Co., Ltd.

“All of this is aimed at restoring the company’s normal production and operations, enhancing operational efficiency through technological upgrades that reduce costs and boost profits, and introducing new product lines. We are confident that we’ll turn a monthly profit in the second half of the year,” said Fu Jie.