ShengdaTech, Inc. Comments on Chinese Government's Recent Tire Industry Policy

SHANGHAI, Nov. 12, 2010 /PRNewswire-Asia-FirstCall/ -- ShengdaTech, Inc. ("ShengdaTech" or the  "Company") (Nasdaq: SDTH), a leading manufacturer of nano-precipitated calcium carbonate ("NPCC") in China, today commented on the Tire Industry Policy (the "Policy") issued by the Ministry of Industry and Information Technology of the People's Republic of China ("MIIT") on September 15, 2010.  

The Company produces NPCC for a wide range of manufacturing applications, including products used in the production of a variety of tire types.  For the three months ended September 30, 2010, sales of NPCC from customers in the tire industry accounted for approximately 27.0% of the Company's total net sales.

According to Mr. Xiangzhi Chen, Chairman and Chief Executive Officer of ShengdaTech, "Because the tire industry is a key NPCC application area for the Company, we thought it important to respond to the new policy so that our shareholders would understand our very positive position on this matter."

The Chinese government has been advocating the transition of production from bias tires to radial tires since 1996.  At the end of 2008, radial tires accounted for 70% of total tire output. The Policy aims to further improve China's tire industry by promoting technological improvements and structural upgrades.  

The Policy encourages the development of high-performance, environmentally friendly radial tires, giant off-the-road ("OTR") tires, wide cross-section, flat-radial passenger-car tires and inner-tube-free radial tires for trucks.  The Policy restricts development and production of bias and inner tube tires. MIIT will only issue new bias tire production capacity for aviation tires and plans to phase out plants producing less than 500,000 units per year of truck and bus bias tires.  It is expected that by 2015, the proportion of radial tires for passenger vehicles will be 100%, for light trucks 85%, and for trucks 90%.

"China's bias tire market was one of our earliest NPCC application end markets; however, we realized many years ago that the transition to radial tires was inevitable.  Consequently, we have successfully planned and implemented accordingly to move effectively with the product-mix changes in the market, both in demand, and, in this case, government policy.  Over the past two years, we have gainfully penetrated the radial tire market, and we currently supply NPCC products to four product categories:  steel radial tires, off-the-road tires, bias tires and powered-vehicle tires including tires for motorcycles, bicycles and handcarts. For the three months ended September 30, 2010, sales from the bias tires application only accounted for 20% of our total sales to the tire industry. The sales from steel radial tires, off-the-road tires and powered-vehicle tires contributed 45%, 20% and 15%, respectively, to our total sales from tire industry applications," commented Mr. Chen.

"We will continue to focus on the tire industry as an important NPCC end market with strong growth potential driven by increasing demand for automobiles in China, the largest automobile manufacturer in the world in 2010. With the technical expertise of our world-class R&D team and market-leading NPCC production technology, we are confident in our ability to continue to broaden our NPCC application to even higher-grade tires, including semi-steel radial tires." Mr. Chen added.

About ShengdaTech, Inc.  

ShengdaTech is engaged in the business of manufacturing, marketing, and selling nano-precipitated calcium carbonate (NPCC) products. The Company converts limestone into NPCC using its proprietary and patent-protected technology. ShengdaTech is the only company possessing proprietary NPCC technology in China. NPCC products are increasingly used in tires, paper, paints, building materials, and other chemical products. In addition to its broad customer base in China, the Company currently exports to Singapore, Thailand, South Korea, Malaysia, India and Latvia. For more information, contact CCG Investor Relations directly or go to ShengdaTech's website at http://www.shengdatechinc.com.

Safe Harbor Statement

Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by ShengdaTech on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These statements include, without limitation, statements regarding the Company's comments on MIIT's tire industry policy, the Company's ability to expand its NPCC application to new end markets and additional tire product types, and predictions and guidance relating to the Company's future financial performance. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs but they involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand especially in the tire industry, changes in composition of tires, the Company's ability to meet the planned expansion schedule for its NPCC capacity, the Company's ability to identify acquisition targets, changes to government regulations, risk associated with operation of the Company's new manufacturing facility, ability to attract new customers, ability to increase its product's applications, ability of its customers to sell products, cost of raw material, downturns in the Chinese economy, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. You are urged to consider these factors care in evaluating the forward-looking statements herein and are cautioned not to place undue reliance on such forward-looking statements, which are qualified in their entirety by this cautionary statement. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations.

SOURCE ShengdaTech, Inc.