8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

______________

FORM 8-K

______________

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)  April 26, 2008

______________

CHINA DIRECT, INC.

(Exact name of registrant as specified in its charter)

______________

Florida	0-26415	13-3876100
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

431 Fairway Drive, Suite 200, Deerfield Beach, Florida	33441
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (954) 363-7333

not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On April 26, 2008, CDI China, Inc., (“CDI China”) a wholly owned subsidiary of China Direct, Inc., entered into an Investment Framework Agreement (the “Agreement”) with Yuhu Chen and Genhu Chen (the “Chen’s”). Under the terms of the Agreement, CDI China will acquire a 51% interest in Baotou Xinjin Magnesium Co., Ltd., a Chinese limited liability company (“Xinjin Magnesium”) that will become a foreign invested enterprise (“FIE”). Xinjin Magnesium produces, sells and distributes magnesium and magnesium alloy products in China. Under the terms of the Agreement, the initial registered investment amount of Xinjin Magnesium to be contributed by the Chen’s and CDI China is approximately $14.3 million. Prior to formation of the FIE, Xinjin Magesium will increase its registered capital through a contribution by the Chen’s of approximately $4.4 million in the form of assets that will include magnesium production and other assets thereby increasing Xinjin Magnesium’s registered capital from $285,714 to approximately $4.7 million. Thereafter, the Chen’s have subscribed to invest an additional $2.3 million in the form of cash and fixed assets to obtain a 49% interest in Xinjin Magnesium. CDI China has subscribed to invest approximately $7.3 million in cash in Xinjin Magnesium to obtain a 51% interest. CDI China will make its cash contribution by way of an initial payment of approximately $4.7 million prior to June 30, 2008 and the balance of $2.6 million within two years of approval of Xinjin Magnesium’s business license by the Chinese government.

The April 29, 2008 press release attached hereto as Exhibit 99.1 inadvertently contained disclosure that CDI China’s obligations were subject to completion of an independent audit, due diligence, and applicable regulatory approvals.

Xinjin Magnesium, based in Baotou, Inner Mongolia, China, presently has an annual production capacity of approximately 6,000 metric tons of magnesium per year. The new joint venture will utilize a portion of the increased registered capital to increase capacity at its current facility to 12,000 metric tons annually. Xinjin Magnesium expects the additional production line should be operational in September 2008. The current infrastructure of the joint venture permits the utilization of the increased registered capital to further expand the annual production capacity to 18,000 metric tons. In 2008 Xinjin Magnesium estimates it will sell and distribute 4,000 to 5,000 metric tons of magnesium in excess of its production capacity until the new production line is fully operational in an effort to meet growing demand for magnesium. Xinjin Magnesium will purchase additional magnesium as necessary from third party manufacturers to satisfy orders from its customers.

The description of the terms and conditions of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of such Agreement, an English translation of which is attached hereto as Exhibit 10.19 and incorporated herein by this reference.

Item 7.01 Regulation FD Disclosure.

On April 29, 2008, we issued a press release announcing that the execution of the Investment Framework Agreement described earlier in this report. The press release is attached hereto as Exhibit 99.1 and incorporated herein by this reference.

The information contained in the press release attached hereto is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

2

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

10.18 Investment Framework Agreement dated as of April 26, 2008 by and between Baotou Xinjin Magnesium Co., Ltd. and CDI China, Inc.

99.1 Press Release dated April 29, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: May 1, 2008

CHINA DIRECT, INC.

By:  /s/ Yuejian (James) Wang

Yuejian (James) Wang

Chief Executive Officer

3

EX-10

Exhibit 10.18

Baotou Xinjin Magnesium Co., Ltd.

Investment Framework Agreement

Party A: Baotou Xinjin Magnesium Co., Ltd.

Party B: CDI China, Inc.

The shareholders of Baotou Xinjin Magnesium Co., Ltd. (“Xinjin Magnesium” or “Party A”), a Chinese limited liability company, have agreed to cooperate with CDI China, Inc. (“CDI China” or “Party B”) to jointly invest and increase the registered capital of Baotou Xinjin Magnesium Co., Ltd. (“Xinjin Magnesium”). Thereafter, Baotou Xinjin Magnesium Co., Ltd. will become a foreign invested enterprise in the Ha Lin Ge Eer Indutry Area of the Jiu Yuan District of Baotou City of the Inner Mongolia Autonomous Region of the People’s Republic of China.

Article 1 Purpose of the foreign invested enterprise/joint venture enterprise

The parties agree to form Xinjin Magnesium as a foreign invested enterprise (“FIE”). Party A and B mutually agree to improve economic cooperation and technology exchange. The goals of the parties are to adopt advanced and applicable technology and business management, improve product quality, develop new products, increase compatibility of quality and price in international market, so as to raise economic returns and ensure satisfactory economic benefits for each investor.

Article 2 Name of the proposed foreign invested enterprise

The full name of the FIE will be Baotou Xinjin Magnesium Co., Ltd., subject to approval by the appropriate government agency for business registration.

Article 3 Productive and business scope of the FIE

To produce, sell and distribute magnesium and magnesium alloy products. The primary products will be magnesium ingot and magnesium alloy. In addition to distribution of production by itself, the FIE will be responsible for the exportation of magnesium products of Baotou Tianhong Magnesium Co., Ltd. Baotou Tianhong Magnesium Co., Ltd. is a Chinese limited liability company jointly owned by Yuhu Chen (51%) and Genhu Chen (49%).

Article 4 Initial production scale of the FIE

Xinjin Magnesium will deploy the registered capital to increase the annual production capacity from 5,000 metric tons to 18,000 metric tons.

Article 5 Investment Structure

The initial investment amount of the FIE is approximately $28.6 million (RMB 200 million), and the initial registered amount is approximately $14.3 million (RMB100 million). This amount must be contributed within two years once the business license has been approved.

Article 6 Baotou Xinjin Magnesium Co., Ltd. Structure

Prior to forming the FIE, Xinjin Magnesium shall increase its registered capital from $285,714 (RMB 2 million) to $4.7 million (RMB 33 million).

1

Thereafter Xinjin Magnesium subscribes to invest approximately $ 2.3 million (RMB 16 million) in the form of cash and fixed assets to obtain a 49% interest in the FIE, which will be held by Yuhu Gen (25%) and Genhu Chen (24%).

CDI China subscribes to invest approximately 7.3 million (RMB 51 million) in the form of cash in installments, 51% of the registered capital of the FIE. An initial investment of $4.7 million (RMB 33 million) should be contributed on or before June 30, 3008. The balance of approximately $2.6 million (RMB 18 million) should be contributed on within two years once the business license has been approved.

Article 7 Confidentiality

Both parties have an obligation to keep the counterpart from disclosing confidential business information.

Article 8 Translation

CDI China shall prepare an English translation of documents related to the transaction. If there is discrepancy among English documents and Chinese version, the Chinese version should prevail.

Party A: Baotou Xinjin Magnesium Co., Ltd.

Shareholder Signature:

/s/ Yuhu Chen

/s/ Genhu Chen

Party B: CDI China, Inc.

/s/ Xiaowen Zhuang

Date: April 26, 2008

2

EX-99

Exhibit 99.1

China Direct to Form its Second Magnesium Joint Venture in Inner Mongolia

New Venture to Add 12,000 Tons of Annual Magnesium Production Capacity in 2008

Deerfield Beach, FL – April 29, 2008 - (PR Newswire) - China Direct, Inc. (NASDAQ: CDS ), a U.S. company that owns controlling stakes in a diversified portfolio of Chinese entities and assists Chinese businesses in accessing the U.S. capital markets, has entered into a definitive agreement to form a new joint venture, Baotou Xinjin Magnesium Co., Ltd. (“Xinjin Magnesium”), as a foreign invested enterprise. Under the terms of the agreement, China Direct will invest approximately $7.29 million (RMB 51 million) to obtain a 51% interest in the new joint venture entity. The investment will be made over the course of two years; $4.71 million (RMB 33 million) will be made on or before June 30, 2008, and the remaining balance of $2.57 million (RMB 18 million) will be contributed within two years of receiving of final business license approval. The final closing of the transaction is subject to completion of an independent audit, due diligence, and applicable regulatory approvals. Management anticipates that the transaction will close on or before June 30, 2008.

Xinjin Magnesium, based in Baotou, Inner Mongolia, China, presently has an annual production capacity of approximately 6,000 metric tons of magnesium per year. The new joint venture is expected to complete construction of an additional 6,000 metric ton magnesium facility by September 2008. Upon that completion, Xinjin Magnesium will have an annual magnesium production capacity of 12,000 metric tons per year or approximately $40 to $48 million in annual sales capacity at current market prices. The current infrastructure of the joint venture permits annual magnesium production capacity of 18,000 metric tons per year should management elect to expand capacity. In addition, Xinjin Magnesium will distribute an additional 4,000 to 5,000 metric tons of magnesium annually to its existing customer base.

Xinjin Magnesium joins China Direct’s growing base of magnesium production subsidiaries which as of April 30, 2008 were as follows:

Name Annual Production
Capacity as of 4/30/2008

Taiyuan Changxin Magnesium, Ltd. 8,000 metric tons

Pan Asia Magnesium Co., Ltd. 12,000 metric tons

Shanxi Gu County Golden Magnesium Co., Ltd. 12,000 metric tons

Baotou Changxin Magnesium Co., Ltd. 12,000 metric tons (facility under construction)

Commenting on the new joint venture, Dr. James Wang, Chairman and CEO of China Direct, stated, “We believe that diversifying our production capacity by establishing additional operations within Inner Mongolia is critical to our overall goal of reducing manufacturing costs as we strive to be among the lowest cost producers in the world. Xinjin Magnesium, our second venture in the region, joining Baotou Changxin Magnesium, which is expected to begin production in the second quarter of 2008, will place a substantial portion of our overall manufacturing capacity in very close proximity to those resources necessary for production which should reduce overall raw material costs.”

Dr. Wang concluded, “With this new joint venture, our annual production capacity will increase to 62,000 metric tons by December 2008. Should worldwide demand for magnesium continue to exceed supply, our potential expansion plans within our current operations are capable of attaining a maximum annual production capacity of 88,000 metric tons by June 2009 with additional capital investment by China Direct. We are confident that through the successful completion of this acquisition, China Direct is poised to become the world leader in the production and distribution of pure magnesium.”

1

About China Direct, Inc.

China Direct, Inc. (NASDAQ: CDS ) is a diversified management and advisory services organization headquartered in the U.S. Our management services division acquires a controlling interest in entities operating in China. Our ownership control enables China Direct to provide management advice, as well as financing to Chinese entities. This infrastructure creates a platform to expand business opportunities globally while accessing the U.S. capital markets. Our advisory services division provides comprehensive advisory and consulting services to Chinese entities seeking to access the U.S. capital markets. As a direct link to China, China Direct serves as a vehicle allowing investors to directly participate in the rapid growth of the Chinese economy in a diversified and balanced manner. For more information about China Direct, please visit http://www.chinadirectinc.com.

Safe Harbor Statement

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations or beliefs, including, but not limited to, statements concerning the Company’s operations, financial performance and, condition. For this purpose, statements that are not statements of historical fact may be deemed to be forward-looking statements. The Company cautions that these statements by their nature involve risks and uncertainties, and actual results may differ materially depending on a variety of important factors, including, but not limited to, the impact of competitive products, pricing and new technology; changes in consumer preferences and tastes; and effectiveness of marketing; changes in laws and regulations; fluctuations in costs of production, and other factors as those discussed in the Company’s reports filed with the Securities and Exchange Commission from time to time. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

Contact:

Investor Relations,

HC International, Inc.

Alan Sheinwald, Partner

Tel: (914) 669-0222

Email: Alan.Sheinwald@HCinternational.net

Company,

China Direct, Inc.

Richard Galterio, Executive Vice President

Tel: 1-877-China-57

Email: Richard@cdii.net

2