The project has not yet started; the land designated for CNOOC’s coal chemical project has been taken back

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The project has not yet begun construction; CNOOC’s coal chemical project site has been taken back. Author/Source: Huahua Network – Coal Chemicals. Date: May 7, 2018. Clicks: 16. CNOOC Petrochemicals (03983-HK) announced that it had recently received an administrative judgment issued by the Higher People’s Court of Shanxi Province on April 20, 2018. According to this judgment, the court upheld the decision by the local authorities to take back, without compensation, the land used by Hualu Coal Chemicals – a subsidiary in which the company holds a 51% stake – as that land was left unused due to the fact that the project had not started construction. This judgment is final and takes effect upon its issuance. Public records show that in July 2009, CNOOC Chemical signed a share transfer agreement with Shanxi Hualu Thermal Power Co., Ltd., acquiring 49% of the shares in Yangpoquan Coal Mine in Hequ County, Shanxi, for 678 million yuan. The aim was to develop coal-based urea production; meanwhile, capital was increased to expand the business. After the transaction was completed, CNOOC Chemical would hold 51% of the shares in Hualu Coal Chemical, becoming its controlling shareholder. However, the Hualu Coal Chemical Project has never been put into operation. CNOOC Chemical stated in its 2013 financial report: \"Shanxi Hualuyangpoquan Coal Mine Co., Ltd., in which the company holds a 49% stake, has not been able to resume operations since it stopped working in March 2010.\" ” On July 30, 2009, the People’s Government of Hequ County, CNOOC Chemical Co., Ltd., and Baotou Hualu Energy Development (Group) Co., Ltd. jointly signed a Cooperation Agreement on the construction of an integrated coal and coal chemical project in Hequ County in Xinzhou City, Shanxi Province. Under the \"Cooperation Agreement,\" CNOOC Chemical Co., Ltd. holds a controlling stake in Shanxi Hualu Coal Chemical Co., Ltd.; the restructured CNOOC Hualu Shanxi Coal Chemical Co., Ltd. serves as the legal entity for the project and is responsible for the construction and operation of the facility capable of producing 600,000 tons per year of synthetic ammonia and 1 million tons per year of large-grain urea. The project is constructed in two phases. Phase 1 involves the construction of a production line for 300,000 tons per year of synthetic ammonia and 520,000 tons per year of large-grain urea. The total investment for this phase is 2,901,350,000 yuan. Once operational, the annual sales revenue will be 866,070,000 yuan, the annual taxes and fees will amount to 84,800,000 yuan, and the annual after-tax profit will be 234,880,000 yuan. The internal rate of return before income tax is 15.03%, while the internal rate of return after income tax is 12.09%. The first phase was completed and put into operation, and construction of the second phase began, with the goal of achieving a production capacity of 600,000 tons per year of synthetic ammonia and 1 million tons per year of large-grain urea.