Did some digging into Chinese news with google and chatgpt, came across this article—really interesting and informative.
https://www.sohu.com/a/796947520_121379383Translated by ChatGPT:
Hebang Biotechnology Expands Global Presence with Strategic Investments
In December 2023, several Chinese ministries jointly released the "Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources," reaffirming the strategic importance of phosphorus resources and setting goals to enhance sustainable phosphorus resource capabilities.
Recently, Hebang Biotechnology announced its intention to increase its shareholding in Australian-listed phosphate mining company Avenira Limited (AEV) to achieve increased shareholdings. AEV owns 533 million tonnes of phosphate resources and exploration rights over 1,724 square kilometers of gold mining areas.
With this move, Hebang Biotechnology's total phosphate resources have soared to 624 million tonnes, placing it among a select few companies with over 500 million tonnes of phosphate resources. This acquisition provides a solid foundation for the company's sustainable development.
Strategic Overseas Expansion
Hebang Biotechnology has made significant strides in its overseas phosphate resource expansion strategy.
On July 26th, Hebang Biotechnology disclosed that its wholly-owned subsidiary, Hebang Biotechnology (Hong Kong) Investment Co., Ltd. (referred to as "Hebang Hong Kong"), signed a "Terms Sheet for Strategic Placement" with Avenira Limited (AEV) on July 25th. Through this agreement, Hebang Hong Kong will increase its shareholding in AEV and make additional investments to achieve increased shareholdings in AEV.
In December last year, Hebang Biotechnology announced that Hebang Hong Kong intended to subscribe for equity in AEV. As of July 25, 2024, Hebang Hong Kong held 2,556,081,820 ordinary shares of AEV, accounting for 10.88% of its issued and outstanding ordinary shares. Hebang Biotechnology stated that to effectively enhance the value of AEV's mineral resources, it decided to increase its shareholding in AEV through Hebang Hong Kong's agreement.
Under the agreement signed between Hebang Hong Kong and AEV, AEV will issue additional shares for subscription. Upon completion, AEV will undergo a restructuring of its board of directors and management. AEV will become a shareholdings-held subsidiary by Hebang Hong Kong.
AEV possesses abundant high-grade phosphate resources and mining licenses in the Northern Territory of Australia, including plans for phosphate development, yellow phosphorus factory investment, and the corresponding land. AEV's phosphate resources amount to approximately 533 million tonnes, while its gold mining exploration area covers about 1,724 square kilometers.
Public information reveals that AEV's phosphate resources are not only vast in quantity but also exemplify high-quality "double-high ores" with low ore loss upon combustion, making them particularly suitable for yellow phosphorus production. Additionally, the ore's quality allows it to be directly used as an agricultural fertilizer.
While phosphate rock is not a rare mineral, its non-synthetic chemical properties and the fact that over 80% of phosphate is used in agriculture without a recycling mechanism render it a non-renewable resource. Phosphate is a classic example of a diminishing asset: once used, it's gone.
Since 2009, China has implemented export quotas on phosphate rock. In 2016, the State Council approved the "National Mineral Resource Plan (2016-2020)," listing phosphate rock as a strategic non-metallic mineral for the first time. To optimize phosphorus resource utilization further, several Chinese ministries issued the "Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources" in December 2023. This plan not only reaffirms the strategic importance of phosphorus resources but also sets specific development goals for the coming years. These include significantly enhancing the sustainable assurance capabilities of phosphorus resources, improving the industry's self-innovation capacity and environmental safety, and significantly increasing the supply capacity of high-end phosphorus chemicals. The plan also aims to cultivate three globally competitive phosphorus chemical enterprises and advance China's phosphorus chemical industry toward high-quality development.
According to the U.S. Geological Survey, the global basic reserves of phosphate rock are approximately 71 billion tonnes. China is a major phosphate resource country, with reserves totaling 3.2 billion tonnes, accounting for 4.51% of the global total. In terms of production, China is one of the world's largest phosphate rock producers. With limited profitability, environmental management, phosphate control, and its inclusion in the national strategic mineral catalog, phosphate rock supply is increasingly concentrated in specific regions and leading companies, mainly in Hubei, Sichuan, Guizhou, and Yunnan provinces. Despite the abundance of global phosphate reserves, factors such as uneven distribution, extraction difficulty, and environmental regulations limit the actual available resources, resulting in a tight market supply.
In terms of demand, the primary consumers of phosphate products are agriculture, industry, livestock breeding, and the new energy sector. In 2022, global grain price increases boosted farmers' planting enthusiasm and fertilizer application willingness, leading to robust phosphate fertilizer demand. The industrial sector, particularly the burgeoning new energy industry, saw a significant increase in lithium iron phosphate capacity. Phosphate rock demand remains strong, with prices at high levels, maintaining industry prosperity. For lithium iron phosphate materials, the cost of iron phosphate, a precursor, accounts for about 30%-40% of the total cost, with the phosphorus source comprising 50% of the iron phosphate cost. It is estimated that one tonne of lithium iron phosphate requires about two tonnes of phosphate concentrate. Future capacity exceeding five million tonnes of lithium iron phosphate will consume more than 10 million tonnes of phosphate concentrate. The substantial downstream demand puts significant pressure on the upstream phosphate rock supply. Since 2021, there have been approximately 40 lithium iron phosphate material expansion projects nationwide, with a total expansion scale exceeding five million tonnes. The new energy sector's ongoing demand for phosphate will continue to support high market prices.
Additionally, AEV holds gold exploration rights. This year, rising gold prices have been a focal point for the market. As gold mining costs continue to rise, they provide strong support for gold prices. As extraction becomes more challenging and resources dwindle, the scarcity of gold resources has garnered increasing market attention.
Building an Internationally Advanced Chemical Enterprise
Hebang Biotechnology owns the Ma Bian Yan Feng phosphate mine and Han Yuan Liu Jia Shan phosphate mine, totaling 90.91 million tonnes of phosphate resources. With increased shareholdings in AEV, Hebang Biotechnology's global phosphate resources have surged to 624 million tonnes, not only consolidating its leading position in the chemical and agricultural resource sectors but also injecting substantial momentum into its globalization strategy. This will help the company maintain its competitive edge in the global market, achieving sustainable and long-term development.
Hebang Biotechnology's "going global" strategy in the phosphate sector has completed optimal integration from an industry chain perspective.
Currently, the company is the world's leading manufacturer of continuous integrated IDA preparation glyphosate, with an existing capacity of 200,000 tonnes per year and an ongoing project in Guang'an with a 500,000-tonne capacity. Yellow phosphorus, an essential raw material for glyphosate products, is expected to see increased demand once the Guang'an project is operational. Hebang plans to leverage AEV's high-quality phosphate resources to establish a yellow phosphorus plant, ensuring a stable supply of high-quality yellow phosphorus to meet future production needs.
Hebang Biotechnology's industry chain also includes full supply chain cost advantages. The Guang'an project's location provides access to essential raw materials such as natural gas, yellow phosphorus, methanol, and salt mines, with low logistics costs. The Indonesia project capitalizes on its favorable logistics, proximity to consumer markets, rich and affordable raw materials, and policy support, effectively supporting the company's globalization strategy.
To support project construction, the company has invested significantly in R&D for the glyphosate production process, achieving major breakthroughs in key areas: significant improvements in product yield at each stage, notably reduced waste emissions, and the innovative adoption of an advanced closed-loop continuous production model, optimizing costs through continuous reactions and recycling.
The two projects embody high-tech, high-efficiency, and high-quality advanced productivity that aligns with new development concepts. They also promote the transformation and upgrading of the traditional glyphosate industry. Upon reaching full capacity, the company will have a 700,000-tonne per year glyphosate capacity and a 250,000-tonne per year glyphosate capacity, becoming a dual leader in the global glyphosate market. This will further enhance the company's core competitiveness and sustainable development capability, exemplifying high-quality development focused on "specialization, professionalism, excellence, and strength." It also represents Chinese enterprises' growth into internationally advanced chemical companies.
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