Guizhou Chitianhua’s 300,000-ton synthetic ammonia and 500,000-ton urea production facilities are set to be demolished!

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Guizhou Chitianhua’s 300,000-ton synthetic ammonia and 500,000-ton urea production facilities are set to be demolished! Author/Source: Yahuac Coal Chemical Industry. Date: 2019-07-18. Clicks: 71. Recently, a meeting was held in Chishui City, Zunyi, Guizhou Province, to prepare for the demolition of Chitianhua’s 300,000-ton synthetic ammonia and 500,000-ton urea production facilities, with the aim of ensuring that this demolition is carried out successfully and safely. From now on, Chitianhua, that renowned state-owned enterprise which had existed along the Chishui River for over forty years, will completely disappear, leaving no trace behind. In the last century, there were two prominent enterprises along the beautiful Chishui River: one was the Moutai Distillery, located in the middle reaches of the river, and the other was the Chishui Natural Gas Fertilizer Factory (abbreviated as Chitianhua), situated in the lower reaches of the Chishui River. Established in the 1970s, Chitianhua is located in Chishui City, Zunyi Province, Guizhou Province, which shares borders with Luzhou City in Sichuan Province on three sides. It makes full use of the abundant natural gas available in nearby Luzhou City to produce urea, a type of fertilizer, thereby supporting the development of agriculture in Guizhou and playing a positive role in ensuring that local farmers have enough food to eat. As the largest nitrogen fertilizer manufacturer in Guizhou Province, Chitianhua’s main business is the production and sale of urea. Its fertilizer and chemical production bases include the Chishui Chemical Branch, which uses natural gas as raw material for production (with an annual output of 500,000 tons of urea), and the wholly-owned subsidiary Tongzi Chemical, which uses coal as its raw material (with an annual output of 520,000 tons of urea and 300,000 tons of methanol). During that period, Chitianhua was essentially a little happy world complete with all necessary production and living facilities. In the 1980s and 1990s, its infrastructure was far more modernized than that of Chishui city center, comparable to that of Guiyang, the provincial capital at the time. Decline: 800 million yuan in losses over three years. Chitianhua used to focus on its chemical manufacturing business, but due to the severe overcapacity in its industry, product prices remained low, which negatively affected its financial performance. An analysis shows that in the early years after its listing, Chitianhua, which was primarily engaged in the chemical industry, performed well. However, between 2008 and 2013, although the company was profitable, its net profit began to decline for six consecutive years. In 2008, Chitianhua celebrated its 30th anniversary of establishment with great enthusiasm, as the entire company held lively festivities. It was also in that year that Chitianhua began to decline gradually. In 2003, Chitianhua borrowed 2.8 billion yuan to build an integrated pulp and paper factory ； In 2005, Chitianhua borrowed 2.8 billion yuan to build Tianfu Coal Chemical in Machangping, Fuquan, Guizhou ； In 2007, Chitianhua took on another loan of 5.8 billion yuan to build the Jinchì Coal Chemical Plant in Tongzi County, Guizhou. Over the past 10 years, Chitianhua has built three major projects: the paper industry project, the Tianfu project, and the Jinchi project. By 2013, Chitianhua’s total assets reached 13.156 billion yuan, while its total liabilities amounted to 8.287 billion yuan. Its debt-to-asset ratio was as high as 62.99%. Since their establishment, the three factories—Paper Industry, Tianfu, and Jinchi—have been incurring losses continuously. After 2013, the price of natural gas in Luzhou, Sichuan began to rise. As a result, Chishui Natural Gas Fertilizer Plant, which had previously been the only facility capable of making a profit by producing urea, also started incurring losses. This became the final straw that broke Chitianhua’s back. In 2014, Chitianhua’s performance was even more dismal: it generated revenue of 3.287 billion yuan that year, a 20.97% decrease compared to the previous year ； Net profit loss amounted to 575 million yuan, a decrease of 7765.73% on a year-on-year basis. In 2015, Chitianhua was on the verge of incurring another net loss; the quarterly reports for that year showed that revenue for the first three quarters amounted to 2.307 billion yuan, a 0.29% increase compared to the previous year ； The net profit showed a loss of 142 million yuan, a 54.73% increase compared to the previous year. Fortunately, Chitianhua recorded a net profit of 162 million yuan in the fourth quarter of 2015, reversing its annual loss situation. However, Chitianhua’s performance in 2016 faced further difficulties, with revenue reaching 2.857 billion yuan, a 3.07% decrease on a year-on-year basis ； The net profit loss was 350 million yuan, a decrease of 37.318 billion yuan on a year-on-year basis. Changes: 500,000-ton urea production facility sold. In March 2018, the name of Chitianhua Company was changed from \"Guizhou Chitianhua Co., Ltd.\" to \"Guizhou Shengjitang Pharmaceutical Industry Co., Ltd.\\" On June 25, 2018, its stock ticker symbol was changed from \"Chitianhua\" to \"Shengjitang\". Following the name change, in addition to its fertilizer and chemical manufacturing operations, Shengjitang’s business scope was expanded to include investments in the pharmaceutical, medical, and health industries ； Research, development, and production of biological, genetic, and cellular drugs ； Operation of large-scale health and pharmaceutical industry projects ； Businesses such as the development of specialized medical services. At the beginning of 2018, Chitianhua signaled its intention to divest its chemical business. On January 26, 2018, Chitianhua announced that it would, depending on the actual operating conditions, consider divesting its chemical industry operations at an appropriate time, thereby shifting from its current dual focus of pharmaceuticals and chemicals to a healthcare industry centered on diabetes and oncology. A year later, the boots finally landed. On March 20, 2019, Shengjitang announced that it would sell its main urea and synthetic ammonia production facility, the Chishui Chemical Branch, in order to raise working capital and focus on developing its pharmaceutical business. It is reported that the company has a urea production facility with a capacity of 500,000 tons, but production was halted as early as November 2015, and it has not resumed to this day. Thus, Guizhou Province’s former largest nitrogen fertilizer producer has completely withdrawn from the market. In the future, no traces of Chitianhua will be found along the Chishui River anymore, yet it will forever remain in the hearts of those who belonged to Chitianhua.