Second largest shareholder of Qinghai Salt Lake changes; million-ton coal-based olefin plant has gone into operation

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Change in the second largest shareholder of Qinghai Salt Lake Industrial Co., Ltd.; million-tonne coal-based olefin plant now in operation. Author/Source: Date: 2017-10-26. Clicks: 78. After a week of suspension, on the evening of October 24, Qinghai Salt Lake Industrial Co., Ltd. (000792.SZ) issued a statement announcing the resumption of trading, and revealed that the company’s second largest shareholder intended to change from Sinochem Fertilizer (0297.HK) to China Sinochem Group Corporation (hereinafter referred to as “Sinochem Group”). The announcement states that Sinochem Fertilizer has transferred its 572 million shares in the company (representing 20.52% of the company’s total share capital) to Sinochem Group on a contractual basis, with the transaction value amounting to 8.063 billion yuan. Upon completion of the transaction, Sinochem Fertilizer will no longer hold any shares in the company, with Sinochem Group taking over as the second-largest shareholder. This share transfer will not affect the company’s control stake. http://img.yf116.cn/image/img/20171026/171056180543.jpg On October 25, officials from Yanhu Co., Ltd. said that although this change in ownership might have some impact on the company’s management structure, it would not affect its operational development. Qinghai Salt Lake Industry Co., Ltd. is a provincial-owned enterprise under the supervision of the Qinghai Provincial State-owned Assets Supervision and Administration Commission. It is currently China’s largest production base for potash fertilizers. “During the 13th Five-Year Plan period, the company focused on establishing three large-scale industrial bases for potassium processing, chlor-alkali production, and magnesium processing, thereby forming five industrial clusters related to potassium salts, magnesium salts, lithium salts, sodium salts, and chlor-alkali products. The plan was to build facilities with a capacity of 6 million tons per year for potassium chloride, 100,000 tons per year for lithium salts, 100,000 tons per year for metallic magnesium, 200,000 tons per year for magnesium hydroxide, 1 million tons per year for methanol, 1 million tons per year for olefins produced via MTO, 1.2 million tons per year for PVC, 2.4 million tons per year for coke, and 1.1 million tons per year for calcium carbide. At the beginning of 2017, the process for all 10 units of the Qinghai Salt Lake Metal Magnesium Integration Project, with a total investment of over 30 billion yuan, was basically established, and qualified products were produced. Qinghai Salt Lake Group has expanded from the potassium fertilizer and salt chemical industries into the fields of non-ferrous metals and coal-salt integrated chemicals. The Qinghai Salt Lake Metal Magnesium Integration Project is the first large-scale chemical project to be constructed in the Tibetan Plateau region. It utilizes the multi-nozzle opposed water-coal slurry gasification technology developed by East China University of Science and Technology. The 1 million tons per year DMTO complex is one of the key production units; it employs the DMTO patent technology jointly developed by the Dalian Institute of Chemical Physics of the Chinese Academy of Sciences, Sinopec Luoyang Engineering Co., Ltd., and Xinxing New Energy Technology Co., Ltd., with Sinopec Luoyang Engineering Co., Ltd. taking overall responsibility for its construction. The 1 million-ton methanol-to-olefins plant at the Qinghai salt lake is the 12th DMTO unit to come online in China’s coal chemical industry. The construction of this combined facility mainly includes a 1 million tons/year DMTO and olefin separation unit, as well as 15 other units for system support and utility services. The 1 million-ton methanol-to-olefins production plant began feeding methanol at 10:00 a.m. on April 9, 2017; at 12:00 of the same day, all the reaction gases were sent to the olefins separation unit. Qualified propylene was produced at 6:30 on the 13th, and qualified ethylene was produced at 4:00 on the 14th. The connection between Sinochem Group and Yanhuhu Co., Ltd. dates back to 2004, as can be seen in http://img.yf116.cn/image/img/20171026/1714106205046.jpg. At that time, Sinochem Group acquired 20% of the shares from the major shareholder of Yanhu Potash Co., Ltd., at a price of 3 yuan per share, totaling 460 million yuan, thereby becoming the company’s second-largest shareholder. Regarding this share transfer, Yanhu Co., Ltd. explained that its aim is to accelerate the diversification of the company’s investment partners and maximize the utilization of state-owned capital. Three years later, in 2007, after 5 months of planning and preparations, Sinochem Group finally transferred all its shares in the salt lake project to its subsidiary, Sinochem Fertilizer. Public information shows that the amount involved in this share transfer is as high as 6.739 billion yuan, with a transfer price of 47.49 yuan per share. As for the reasons behind this second share transfer, it is widely believed that the issue lies in the certain degree of competition between Sinochem Fertilizer, which went public in Hong Kong in 2005, and Salt Lake Co., and having the former hold shares in the latter would be more conducive to the development of their business operations. Ten years later, the situation seems to have changed again. According to the announcements released by Salt Lake Co. and Sinochem Fertilizer respectively on the evening of October 24, Sinochem Fertilizer will transfer all of its 20.52% stake in Salt Lake Co. to Sinochem Group for 8.063 billion yuan, thereby returning things to the situation that existed in 2004.