Breaking News: China Direct Industries, Inc. (NASDAQ: CDII) signs letter of intent to form new heavy truck parts manufacturing joint venture in its basic materials segment. The company, a U.S. owned, rapidly growing holding company operating in China in two core business segments, pure magnesium production and distribution of basic materials, issued a press release this morning announcing that it has entered into a letter of intent to form Jinan Zhongsen Machinery Manufacturing Company, Limited ("Zhongsen Machinery") as a foreign invested enterprise. Zhongsen Machinery is a heavy truck parts manufacturer in the Peoples Republic of China. Under the proposed terms of the letter of intent, China Direct Industries will invest approximately $3.3 million over the next two years to obtain a 45% interest in the joint venture. The letter of intent is intended to be non-binding and is subject to all necessary due diligence, China Direct Industry's board of directors' approval and execution of definitive agreements. Management anticipates closing the transaction sometime before the end of 2009. Management of China Direct Industries plans to assist Zhongsen Machinery with its goal of applying for listing its common shares on a stock exchange in the Peoples Republic of China by 2012.

Located in Jinan Zhangqiu Mingshui Economic Development Zone in Zhangqiu, Jinan City, Shandong Province, Zhongsen Machinery has over 400 employees and generated unaudited revenue of over $15 million in 2008 with net profit of approximately $1.6 million. For the first five months of 2009, Zhongsen Machinery has generated unaudited revenue of $9.3 million with net profit of approximately $1.4 million.

Commenting on the letter of intent, Dr. James Wang, Chairman and CEO of China Direct Industries, stated, "China currently produces about 30% of the 3.6 million heavy trucks produced each year throughout the world. And recently China has become a major exporter with international sales reaching 43,000 units and growing at a compounded rate of 100% over the past few years. We believe the demand for parts will continue to grow as customers attempt to increase the life of their capital investment. We believe these factors, coupled with China's continued growth in market share, make this industry an excellent opportunistic investment for our company.