Harbin Electric to make linear motor freight trains

Harbin Electric, Inc. (Nasdaq: HRBN), a leading developer and manufacturer of a wide array of electric motors in China, announced yesterday that it has signed an agreement with a domestic Maglev technology company to co-develop a linear motor-driven freight train system for coal transportation. Under the agreement, the initial phase of the project is to build 850 meter long testing line in a coal mine in Inner Mongolia.

Once the testing line is validated, the project is expected to expand to a 32 km long coal transportation line in Inner Mongolia. Harbin Electric will be responsible to provide linear motor driving systems including the motors' primary and secondary components for the entire transportation line. For the initial testing line, the Company will deliver 5 linear motors to be integrated with the train along with a total of 850 meter long secondary components to be installed on the train track before the end of June 2009.

"I am very excited about this project," said Tianfu Yang, Chairman and Chief Executive Officer of Harbin Electric. "Not only because it is the first of its kind in the mining industry and in the electric motor industry in China, but also because it opens a new market potential for us and we believe that the potential is substantial."

Yang continued, "Energy plays a fundamental role in China's economic development and coal is a dominant component. It is used in all sectors of China's economy and in particular in coal-fired electricity generation. With rapid economic growth in China, increasing electricity consumption continuously drives the demand for coal higher. However, due to lack of efficient coal transportation systems in the mining industry, particularly from coal mines to shipping ports, power plants, freight hubs, etc., the cost for coal transportation in China has been steadily increasing, driving up coal prices continuously. The Chinese government has plans to control coal prices, one of which is to build efficient, automated, and modern coal transportation systems at mines in major coal producing provinces."

Yang added, "Linear motor technology can be customized for fast, safe, clean, efficient, unmanned, and low cost freight transportation. I am very pleased that the Company has been chosen to be a key player in building this system in inner-Mongolia. Inner Mongolia is a province with an abundance of natural resources such as coal. There are many provinces in China such as Shanxi and Yunnan that have abundant coal reserves. I believe that those provinces will also need this technology once this technology is validated."

Mr. Yang concluded, "This project is another demonstration of our ability to expand and penetrate new markets thanks to our strong R&D, flexible manufacturing platform and expertise in specialty electric motor technology. I am confident that we are well positioned to capture many opportunities like this in the future."