Strategy
Iron Ore Business
Prosperity intends to develop an integrated supply chain of iron ore to the PRC with a particular focus on the upstream iron ore supply chain. This strategy can be broken down into the following key components:
Supply chain integration
Historically Prosperity has made relatively limited capital investments in fixed assets and other investments in order to make the most effective use of its working capital. However, in a changing market enviroment, the directors believe that the Company can best exploit the high demand for iron ore in the PRC by creating a vertically integrated supply chain that will add value to the Company's business by giving it access to reliable supplies of iron ore and allowing the Company to earn mining profits.
In December 2010, Prosperity completed the subscription for an effective 35% interest in a JV company engaged in the exploration and mining of iron ore in Brazil. The Company will continue to investigate opportunities to acquire and operate iron ore reserves.
Develop and maintain supplier relationships & diversify sources of supplies
Prosperity aims to maintain and develop its already strong relationships with its key iron ore suppliers which, the directors believe, have been essential in securing a stable source of iron ore for its customers.
In 2010 and 2011, the Company entered into four iron ore off-take agreements that will increase its access to reliable supplies at a competitive price.
Strengthen customer relationships
The Company aims to further develop existing industry relationships and use its position as a committee member on the Southern 20 Steel Enterprises Committee to foster deeper relationships with steel mills in the PRC to better understand the requirements of its targeted market and industry trends. Continuing to develop these relationships to understand customer requirements better should enable the Company to continue to provide value-added services and strengthen customer loyalty.
Real Estate Investment and Development
Prosperity is focussed on identifying and pursuing only the best PRC real estate investment and development projects with good upside potential and manageable risk.
Cement Operations
Environmental considerations
Prosperity is committed to minimising its impact on the environment. The Company’s cement and clinker manufacturing facilities are new modern suspension pre-heater plants, also known as “dry method production”. This production method is more efficient and environmentally friendly than the old vertical kiln production plants or “wet method production” which causes a lot of pollution, in particular water pollution, and uses substantially more coal to dry the clinker during the manufacturing process. The cement plants also have residual heat electricity generation units.