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Publish Date : 20-Jul-2016

A deal worth $168 million is entered by Ballard Power Systems with Guangdong Nation Synergy Hydrogen Power Technology to set up an FCvelocity-9SSL fuel cell stack production operation in the City of Yunfu, in Guangdong Province.

Into locally-assembled fuel cell engines the fuel cell stacks will be packaged and integrated into zero-emission buses and commercial vehicles in China.

A joint venture will be formed to take on the stack manufacturing operations and will be owned 90 % by Synergy and 10 percent by Ballard upon closing of the transaction, likely in late-2016.

Ballard under the terms of the five-year agreement will get $18.4 million in Technology Solutions revenue for technology transfer services, production equipment specification and procurement services, training and commissioning support corresponding to the establishment of a production line in Yunfu for the manufacture and assembly of FCvelocity-9SSL fuel cell stacks.

In 2017 most of the revenue from this deal is likely to be recognized.

On commissioning of the operation, expected in 2017, Ballard will be the exclusive supplier of membrane electrode assemblies (MEAs) for each fuel cell stack manufactured by the joint venture, with minimum annual MEA volume commitments on a take or pay basis totaling in excess of $150 million over the initial 5-year term from 2017 to 2021.

The transaction indicates important progress for Ballards China strategy in the previous 18-months, accelerated by an historic meeting and key discussions at Ballards headquarters in Vancouver on May 9th this year with the visit of Mr. Hu Chunhua, Party Secretary of Guangdong Province.

Randy MacEwen, Ballards President and CEO said, There is unprecedented market interest for fuel cell buses and commercial vehicles in China the largest market in the world. With our leading brand, technology and field experience, Ballard is uniquely positioned to address the market for fuel cell buses and commercial vehicles with our partners in China.

Ballard under the terms of the joint venture will give RMB 20 million (approximately $3.0 million) for its 10% joint venture interest, appoint one of the three joint venture board directors, have veto rights over certain key joint venture decisions, decide on the marketing strategy and will have no further obligation to provide future funding to the joint venture.

The joint venture after commissioning of the operation will have a special right to manufacture and sell FCvelocity-9SSL stacks in China. Ballard will have the exclusive right to acquire fuel cell stacks and sub-components from the joint venture for sale outside China.

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