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Sinochem Becoming Second Biggest Shareholder of Qinghai Salt Lake

Date:2006-07-20 Source:Sinochem Group
On July 8th, on the 6th Qinghai Investment & Trading Fair, Sinochem Corporation signed an agreement with Qinghai Salt Lake Industrial Group named as “The Cooperative Framework Agreement on Sinochem's Shareholding Increase on Qinghai Salt Lake Industrial Group”. Sinochem's President and CEO Liu Deshu and Qinghai Province's Governor Ms. Song Xiuyan, were present at the signing ceremony. According to this framework Agreement, Sinochem will acquire 24.9955% of the total equity of Qinghai Salt Lake which will enable Sinochem to become Qinghai Salt Lake's second biggest shareholder. Qinghai Salt Lake's biggest shareholder is Qinghai State-owned Assets Investment and Management Co., Ltd.

Qinghai Salt Lake is China's largest inland salt lake chemical production base. It is the franchised developer of Chahaer Salt Lake which is to the north of Qinghai-Tibet Railway. The company enjoyed unique resources and production advantage. The fund from Sinochem to purchase the equity will be destined to the second phase of Chahaer Salt Lake's comprehensive exploitation project. Three industrial pivot as potassium, magnesium and chloro-alkali will be established to let the company become China's greatest salt lake chemical manufacturing powerhouse. The salt lake has the country's largest reserve of sodium chloride, potassium chloride, magnesium chloride, lithium chloride, which equal with the total economic value of 12 trillion RMB.

Prior to the latest acquiring, Sinochem has purchased the share of Qinghai Salt Lake's only listed branch, Qinghai Salt Lake Potash (Code: 000792) by 460 million RMB in 2004. Sinochem now owns 18.49% of Qinghai Salt Lake Potash's total share after the company has accomplished its G-share reform. Sinochem's investment on the exploitation of the salt lake's resources has exceeded 1.5 billion RMB in aggregate.

On the backdrop of China's great initiative of developing its west, Sinochem's move of connecting the financial leverage with the local resource will greatly promote Qinghai province's local economic development. Sinochem will play an even bigger role executing the country's “go west” strategy.