Senior government officials from Shandong Province of the People’s Republic of China visited the research and development unit of Perth-based Advanced Engine Components Ltd (AEC) today. Led by Vice-Governor of the Shandong Provincial People’s Government, His Excellency Mr. Wang Ren Yuan, the group inspected AEC development work being carried out on a range of engines from France, Germany and, most notably, China.

While the delegation led by Vice-Governor Wang is visiting Western Australia this week to discuss a wide range of co-operation between the State and Shandong Province, the visit to AEC comes at the eve of another major breakthrough of the company’s venture into the China market.

Earlier this week, AEC concluded the negotiation of a product development and components supply agreement with Weichai, one of China's largest manufacturers of heavy duty d iesel engines, based in Weifang City of Shandong Province. The formal signing of the agreement is anticipated to take place in Hong Kong within a week.

Under the agreement, AEC will develop technology and supply components to adapt one of Weichai's heavy duty diesel engines to run on alternative fuels, using AEC’s patented Natural Gas Vehicle System (NGVS) technology. The development focus is on the enormous China bus fleet market, estimated at 120,000 new vehicles a year. Industry sources have indicated that approximately 20,000 of these buses a year will be designed to run on alternative fuels (natural gas and LPG).

AEC managing director, Mr Tony Middleton, said the agreement with Weichai had come less than a year after a similar arrangement with First Auto Works (FAW), another of China's largest engine and vehicle manufacturers.

"This justifies our confidence in the potential of the Chinese market, and our commitment to developing long term strategic partnerships with established players in the market and developing manufacturing capacity there," said Mr Middleton.

"Development work on FAW engines is now at an advanced stage at Malaga, and we are confident that certification will be achieved in time to commence manufacture of FAW units in China in 2005.

"FAW has already confirmed an ongoing large requirement for NGVS units, and our discussions with Weichai indicate the potential to generate substantial volumes via that company as well, once engine certification had been achieved," he said.

NGVS is already in commercial use in Australia, France and Hungary, providing an environmentally friendly and sustainable alternative to diesel engines. In those countries over 600 vehicles are currently demonstrating the effectiveness of the AEC technology, and have collectively completed more than 60 million kilometres.

Key benefits of NGVS include:

For further information please contact:
Tony Middleton, Managing Director, AEC: 9209 6900 / 0400 588 949
Or
Jim Ward, Ward Holt Corporate Communication: 9221 8722 / 0412 905 423