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Fertiliser producer sets up Yangtze shipping JV

17 October 2012
Yichang Chemical, the world’s largest fertiliser producer by output, plans to set up a joint venture with Yangtze Phoenix, the wholly owned subsidiary of Sinotrans China Yangtze Shipping, the largest barge operator on the Yangtze, according to China Shipping newspaper. Currently a major client of the shipping line, Yichang plans to take 49 per cent of the joint venture with an injection of Rmb4.9m, while Yangtze Phoenix will hold the controlling stake.

The joint venture, yet to be registered, will offer barge services for bulk and breakbulk and domestic services along the coast. It will also be involved in cargo and shipping agency business and trade. The new company will have a lifespan of 25 years with options of a possible extension.

Yihua, short for Yichang Chemical, is located in Yichang, the city of The Three Gorges and ranks among the top 10 chemical and petrochemical manufacturers in China. Employing more than 50,000 staff nationwide, it boasts an annual output of 12.5m tons of fertiliser. Sales, which have increased 30 per cent annually over the past five years, are expected to reach Rmb70bn, up 25 per cent over that of last year. Exports last year totalled US1bn and taxes Rmb1.8bn.

Yangtze Phoenix, by contrast, is in deep financial difficulty. The company, listed on the Shenzhen Stock Exchange, recently announced that it is to sell 13 of its vessels. Its parent company, Sinotrans China Yangtze Shipping, has a history of more than 130 years and is one of the three major shipping lines in China, behind Cosco and China Shipping. In 2000, the company moved into ocean shipping, specialising in the transportation of oil.

The listing of Yangtze Phoenix in 2007 allowed Sinotrans China Yangtze Shipping to embark on a Rmb1.8bn shipbuilding spree before the onset of the worldwide economic crisis.

It is not clear yet whether the chemical giant’s plan to enter into a joint venture with Yangtze Phoenix is part of the central government’s ongoing efforts to salvage China’s major shipping lines.

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