Shandong Haihua: Leading Enterprise in the Marine Chemical Industry       

Shandong Haihua Co., Ltd. (SZ: 000822) is mainly engaged in the production of chemical products such as soda ash, calcium chloride, bromine, melamine, nitric salts, caustic soda and PVC (polyvinyl chloride). It was listed on the Shenzhen Securities Exchange in May 1998.
    Since its listing, the company has fully used the capital market, relied on its advantage in natural resources and highlighted the introduction and development of marine chemical technologies. It has already built up a production capacity of 2.0 million t/a soda ash, 350 000 t/a calcium chloride, 72 000 t/a melamine, 15 000 t/a bromine, 160 000 t/a sodium nitrate and sodium nitrite, 100 000 t/a caustic soda and 100 000 t/a PVC. Its capacity for making soda ash, sodium nitrate and sodium nitrite holds the world's leading position. Its calcium chloride and melamine capacity also ranks leading position in Asia. And its capacity to make bromine and bromides is number one in China. The company is one of the biggest production and export bases of marine chemicals in China.

Leading role in the soda ash sector

Shandong Haihua Co., Ltd. is located in Weifang, Shandong province, the biggest sea salt production base in China. The area of salt fields in the city accounts for 20% of the national total. Shandong Haihua Co., Ltd. has developed itself on the basis of salt resources and owns large salt plants. Owing to the advantage in salt resources, abundant raw materials have been provided to the soda ash production in the company.
   Soda ash is one of the major products in the company. The low cost of the soda ash production mainly comes from the efficiency of the industrial chain and the expansion of production scale. With the prosperity of the real estate and construction sectors, sales of glass, which requires soda ash in its manufacture, have been quite sound in recent years. A price rise has led to an expansion of the glass manufacturing sector and also a huge growth in demand for soda ash. Stimulated by the brisk market, Shandong Haihua Co., Ltd. has constantly expanded capacity to meet the increasing market demand.
   The financial performance statement of 2006 shows that the core business revenue from soda ash was RMB2.241 billion, accounting for 26.88% of the total core business revenue of the company. The company's capacity to make soda ash has reached 2.0 million t/a. According to the chairman of the board in March 2007, the company will further expand its soda ash capacity to upgrade its core competitiveness. The near term (two year) target is 3.0 million t/a and the long term target is 4.0 million t/a.
  In addition, a 200 000 t/a calcium chloride project in the company's Calcium Chloride Plant started production on June 5th, 2006. The company's calcium chloride capacity has therefore reached 350 000 t/a. (CCR2006, No. 18)

Comprehensive utilization of resources

Shandong Haihua Co., Ltd. became one of the first pilot enterprises of cyclic economy in 2005 and its recycling projects won policy and capital support from the government. In the marine in-depth processing sector the company has formed four major industrial chains of soda ash series, bromine series, bittern chemical series and fine chemical series. Owing to these four major industrial chains, resources, products and scraps can be fully utilized. A marine chemical ecological system featuring the close linkage between upstream and downstream products and the cyclic and comprehensive utilization of resources has therefore been established.

Potential of foreign cooperation

Shandong Haihua Co., Ltd. announced on June 8th, 2007 that its controlling shareholder, Shandong Haihua Group Company Ltd. intended to establish a joint venture with Carlyle Group. Both sides signed an MOU that was valid up to July 5th, 2007. According to the document, Carlyle Group would have subscription in cash and Haihua Group would have subscription in assets and keep its controlling position in the joint venture enterprise. (CCR2007, No. 18)
   On July 6th, 2007, however, Shandong Haihua Co., Ltd. announced that the MOU signed by Haihua Group and Carlyle Group had expired. No substantial agreement between the two sides was reached and the MOU ceased to be in force. (CCR2007, No. 20)
   Although the cooperation is not successful this time, as the company has a unique advantage in resources and a leading position in the marine chemical industry it has huge potential for acquisition and cooperation.