Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Pearce Hammond - Simmons & Co.
Pearce Hammond - Simmons & Co
The first question I had was, if you look at the Chinese government in the past quarter had made an announcement that they were concerned about over capacity in some basic industries, and I was curious if that particular announcement impacted SES in any way?
Robert Rigdon
Okay, thanks for the question. I think I will let Don handle that question since he is there on the ground in China.
Donald Bunnell
Let me just start out specifically, we don’t believe it’s going to impact the Yima project, you have to remember that the Yima project was approved last February before these regulations came out. Typically, the way these regulations work as they are not retrospective, they are forward-looking.
We’ve thought about it, we’ve looked at these and our conclusion is this is not going to impact the Yima project. I talked about the Phase II expansion of Dudlong, those approvals are not in place yet, but we don’t believe it’s going to impact the approval of that expansion. The product that we are looking at there is not methanol, it’s not one of the products that’s been outlined by the Chinese government for possible over capacity.
So we’re not too concerned that it’s going to impact that approval either. I can’t say that one of the nice things about gasification are there - there is lots of downstream applications that are not covered by government’s current focus on some of these commodities. So I think there are still lot of opportunity in China and other areas.
Pearce Hammond - Simmons & Co
Then as a follow up, can you provide an update on the bank financing status there at Yima?
Donald Bunnell
Yes, from our perspective we have a binding commitment from Yima to provide the debt. The baseline is still Chinese commercial lending to the project and we’re moving forward with that. But from our perspective we have a binding long commitment from a very credible partner.
So if the banks don’t come through, Yima will enter the project and we’re very, very comfortable with that, is that enough cash in the joint venture, remember that we put in all our equity, Yima’s put in all their equity which equals 50% of the project cost. So we have plenty of cash to move the project forward and we’re really focused on execution right now.
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