Jinmei Acquires Six Chemical Enterprises in Henan (Repost)

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Author: Oriental Finance & Economics Weekly Date: 2008-8-12 9:33:14 Rising coal prices have put chemical companies at the lower end of the industrial chain in a difficult situation regarding raw materials. And this turned into a \"golden opportunity\" for the coal giants, who possess resources, to raise their sickles. On August 3, Henan Jinkai Holding, a subsidiary of Shanxi Jinmei and ranked 7th among China’s top 100 coal enterprises, acquired six chemical companies in Henan in one go. However, the coal industry leaders in Henan have not been idle either; aside from seizing resources, they have also made significant efforts in the deeper processing of coal, such as in coal-to-oil and coal-to-gas conversion. 　　Jin Kai Holding Acquires 6 Chemical Companies in One Go On the morning of August 3, at the Kaiyuan Hotel on the east side of Zhengkai Avenue, a signing ceremony was held for the merger and restructuring agreements between Henan Jin Kai Chemical Investment Holding Group (hereinafter referred to as “Jin Kai Holding”) and 6 chemical companies in Henan Province. 　　These 6 companies are: Henan Lvyu Chemical & Electrical Co., Ltd., with Jin Kai Holdings holding a 51% stake ； Henan Caixin Industrial Chemical Co., Ltd., with Jin Kai Holdings holding 60% of the shares (excluding the chemical assets related to the compound fertilizer production system) ； Henan Hongda Chemical Co., Ltd., with 51% ownership held by Jinkai Holdings ； Taikang County Xinzhou Chemical Co., Ltd., with Jin Kai Holding holding 51% of the shares ； Sanmenxia Jinmao Chemical Co., Ltd., 100% owned by Jinkai Holdings ； Lingbao Xinnong Chemical Co., Ltd. is wholly owned by Jinkai Holdings. 　　“This is the first time since Jinmei entered Henan for development that it has carried out such large-scale mergers and reorganizations. ”Zhao Zhigang from the Party and Labor Department of Jin Kai Holdings said. On May 28, 2004, Jinneng Coal Group restructured Kaifeng Fertilizer Factory to establish Jinkai Chemical Co., Ltd. (which was officially renamed “Jinkai Holdings” on May 28 of this year), thus beginning its journey in Henan. 　　“Following the completion of the mergers and reorganizations of these 6 companies, Jinkai Holding’s total ammonia production capacity will exceed 1 million tons per year, enabling it to become the largest in Henan. ”Zhao Zhigang said. 　　Opportunities and challenges brought about by a 300-yuan rise in coal prices 　Jin Kai Holdings has expanded its presence in 6 cities in a row, with the significant increase in coal resource prices playing a role in facilitating this progress. Public data shows that since last year, coal prices have risen by an average of over 300 yuan per ton, with high-quality coal seeing increases of as much as 700 to 800 yuan per ton. “This has directly led to tensions among chemical companies that lack upstream coal resources. ”Relevant officials said, \"Combined with the electricity shortage in the first half of the year and the upcoming Olympics, **expects coal companies to give priority to supplying electricity companies.\" Rising prices, shortages of coal resources, coupled with coal companies themselves expanding their business by integrating coal processing into their industrial chains and thus consuming large amounts of coal, are putting chemical companies under unprecedented pressure in terms of raw materials. ” 　　The reporter noted that among the 6 companies involved in the restructuring of Jin Kai Holding, in addition to the little-known Tai Kang County Xin Zhou Chemical Industry, there was also Cai Xin Industrial Chemicals, which is part of the Cai Xin Group. 　　Jin Kai Holdings stated that although this restructuring is encouraging, the future prospects are “even more optimistic than they are now”. 　　It is understood that at present, Jin Kai, as the enterprise with the largest total ammonia production capacity in Henan, has gained the recognition of the senior management at Jin Coal Group. In the future, Jincheng Coal Group’s expansion in Henan will be carried out through Jinkai Holdings. 　　The coal giants’ “chemical industry ambitions” Although acquiring 6 companies at once seems an ambitious move, this is not all of Jinmei’s expansion efforts in Henan. 　　According to Jin Kai Holding, on the one hand, it will renovate the old factory complex in order to raise the total ammonia production capacity of its headquarters to 500,000 tons per year ； On the other hand, Jinkai Holding’s project to invest 6 billion yuan in Kaifeng County to build a new plant capable of producing one million tons of ammonia alcohol has also been fully launched ； At the same time, Jinnan Coal Group invested in a 5-million-ton coal storage and transportation project in Qinyang, and partnered with **Yangtze River Infrastructure to invest 3 billion yuan in building a chemical industry project ； In addition, Jinkai Holdings is also actively cooperating with Zhoukou City to plan the construction of a new project for producing one million tons of ammonia alcohol. “By 2007, over 62% of Jinneng Group’s profits came from its coal chemical business; in the future, Jinkai Holding will become the leading company within Jinneng in this sector. ” 　　In fact, while outsiders were acquiring land in Henan to expand their operations, the provincial coal giants in Henan also did not forget to strengthen their coal chemical industry. 　　On July 25, reporters learned at a symposium held by the Provincial State-owned Assets Supervision and Administration Commission titled \"Symposium on Studying the Spirit of Secretary Xu Guangchun’s Speech at the 8th Plenary Session of the 8th Term by Henan’s Business Community\" that breakthrough progress has been made in coal gasification and coal liquefaction in Henan. 　　Chen Xuefeng, chairman of Yongmei Group, said: “At present, Yongmei’s pulverized coal pressurized gasification demonstration unit is the first of its kind in China.” ； ‘Progress has been made in ‘producing gasoline from syngas’ ； ‘Positive progress has been made in ‘coal-based rich-oil mixed alcohols’, and ‘synthetic oil production from coal via dimethyl ether’ has reached world-leading levels.” 　　Chen Jiansheng, chairman of Pingmei Group, also said that the sales revenue from the coal chemical sector of Pingmei this year will exceed 20 billion yuan, while the annual profit will surpass 1 billion yuan ； It was also stated that \"Pingmei currently has the largest enterprises in the country for the production of methanol, saccharin, and ultra-high-power graphite electrodes, and on July 12 of this year it launched the largest PVC production facility of its kind in China.\"