Liuhua Co., Ltd.: One of the most influential enterprises in China’s coal chemical industry

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After nearly a year of commissioning, the 300,000-ton synthetic ammonia plant built by Liuhua Company using Shell’s technology achieved an operation rate of over 90% by the end of 2007, with a daily ammonia production of more than 800 tons. Thanks to Shell’s gasification technology’s ability to handle a wide range of coal types, its high carbon conversion rate, low coal consumption, and the advanced shift process which helps save around 50% of steam usage, the cost per ton of ammonia produced is 20% lower than that of older systems. We expect this to become an additional source of profit growth for the company in 2008. Its net profit is expected to rise by 79% year-on-year to 250 million yuan in 2008. 　　While continuously improving its chemical production technologies, Liuhua Company is also pursuing mergers and acquisitions in upstream areas to achieve vertical integration of its industrial chain. By investing 84.73 million yuan to acquire the Guizhou Xinyi Coal Mine, it plans to establish a coal raw material production base with an annual output of over 1.5 million tons. It is expected that this coal mine will start generating significant profits by 2009, with coal production rising from 200,000 tons in 2008 to 600,000 tons. Thanks to increased coal production and the contribution from 200,000 tons of nitro compound fertilizers, the company’s profits are expected to continue growing at a rapid pace in 2009, with an increase of 44% on a year-on-year basis. 　　Over the next three years, Liuhua Company plans to continue expanding its coal chemical industry chain, and will build projects for 200,000 tons of acetic acid and 200,000 tons of dimethyl ether at an appropriate time. 　　Comment: Liuhua is a rising star with rapidly growing performance, and it has mastered advanced gasification technology.