China XLX Fertiliser Ltd

Agriculture forms thefoundation of the PRC’seconomic growth and thefertiliser industry playsan important role.Coal prices increased about 50% in 2008,resulting in the shutting down of many small,inefficient producers due to their higher coststructures. Even though the larger, especiallygas-based producers are less affected, thegovernment has introduced measures torestrict any more green fields by gas means,which is expected to result in learning curvewhen the gas-based producers expand viacoal means.Therefore cost becomes the key differentiatingfactor amongst fertiliser producersAmidst such an industry consolidation, it willonly be the fittest that will survive. As such,mid to large enterprises that enjoy proximityto resources, are technologically advancedhave low consumption levels will be at anadvantage and stand to gain from developmentopportunities.China XLX is well positioned as the lowestcost coal-based producer of urea in Henanand the 4th largest coal-based producer ofurea in the PRC. It is strategically located inHenan, close to the main coal mines in Shanxiand yet at the epicenter of the agriculturalbelt in the PRC. In addition to its strategiclocation, China XLX achieves superiorityover its competitors by using technologicaladvanced equipment and processes whichenables us to use about 10% less coal and20% less electricity than the industrialaverage in the PRC.China XLX will continue to grow in its sizeand strength to increase its position as arising star in the coal-based chemical industry,which in 2008 was ranked amongst the “Top100 coal-based chemical fertiliser company inthe PRC” .OUR INDUSTRY5