China XLX Fertiliser Ltd

OUR INDUSTRYGlobal and IndustryChallengesFertilisers exert a great influence insustaining the growth of agriculture in thePRC, a predominantly agriculture country.According to the Food and AgricultureOrganisation of the United Nations, 55% ofcrop yield increase in developing countriesis attributed to the use of fertilisers, with cropyield increasing 7.5kg with every kilogrammeof fertiliser used.There is strong demand for chemical fertilisersin the PRC which is inhibited by 20% of theworld’s population but only has 7% of theworld’s arable land. Organic fertilisers onlysupplies about 1% of the countries demandfor fertilisers. It is therefore not surprisingthat the PRC is the largest producing andconsuming nation for chemical fertilisers asit is vital for the country to be self-sufficientin fertilisers. In 1960s, China had only had apopulation of about 600 million. But about30 million died due to starvation due toinsufficient fertilisers to support the country’sincreasing population growth. Today, thePRC has growth to a population of about1.3 billion people. But due to China’s selfsufficiencyin chemical fertilisers, very fewactually die of starvation today.There are 3 main types of chemical fertilisersbased on the nutrients that the soil needs.They are Nitrogen (N), Phosphorous (P) andPotassium (K) to support the stem, root andfruit growth respectively.Nitrogenous fertilisers are used mostextensively with urea being the mostcommonly used nitrogenous fertiliser dueto its high nitrogen content. Urea accountsfor about 60% of all nitrogenous fertilisersused in the PRC. In 2008, according to theInternational Fertiliser Association, thePRC produced about 56 million tons ofurea, consuming about 52 millions tonsdomestically and exporting about 4 milliontons.The urea industry in China is very fragmentedwith about 200 producers and the largestaccounting for only about 3% of the nation’smarket share.About three quarters of the 200 ureaproducers are small and inefficient. In 2008,the industry faced many challenges suchas high coal prices which affected about80% of urea producers that are coal-based.Potassium(K)17%OtherNitrogenousFertiliser40%Phosphorus(P)23%Nitrogen (N)60%Urea60%OUR INDUSTRY4