Sinofert growth plan includes purchase of two fertiliser makers

Sinofert Holdings, the fertiliser unit of mainland oil trader Sinochem Corp, expects to complete one to two acquisitions of minority stakes in nitrogenous fertiliser makers this year, chief executive Du Keping says.

Sinofert, China's largest fertiliser distributor, will take stakes of less than 10 per cent to form supplier-distributor alliances as part of its strategy to expand sales volume, he said.

'We aim to use small stake investments to secure long-term, stable and large procurement volumes,' he said, adding the firm was in talks with several acquisition targets in Jilin, Jiangsu and Shandong provinces.

Sinofert preferred buying into listed companies for higher liquidity of their equities, as well as those with advanced technology and retail networks that complemented its own, Mr Du said.

All the acquisition targets produce nitrogenous fertiliser from coal.

'Coal is more competitive as a feedstock due to its abundance in China while rising gas prices are eroding the competitiveness of gas-based producers,' Mr Du said.

Coal-using producers make up 60 per cent of national nitrogenous fertiliser output, compared with 30 per cent using gas as feedstock. The rest use heavy oil.