China BlueChemical Ltd, the fertilizer-making arm of the nation's top offshore oil company, CNOOC, plans to acquire peers to increase its output and become an industry leader in five years.

China BlueChemical currently has about 4 per cent of the mainland's nitrogen-base fertilizer market.

"We hope to take a leading position in the industry in five years," Chief Executive Officer Yang Yexin told reporters yesterday.

He said the company will pursue a "two-pronged" strategy for expansion, increasing production capacity mainly through mergers and acquisitions.

Against the backdrop of a fragmented market, Yang said many small companies had great potential to grow.

"We are eyeing players with a production capacity of at least 50,000 tons," said Yang.

Total fertilizer production capacity on the mainland amounted to 46 million tons last year.

With a less than 30 per cent gearing ratio, Yang is confident that China BlueChemical's financial status is healthy enough for acquisitions.

"Second, organic growth will be another driver for the company. We hope to boost growth via developing our own technology," said Yang.

To do so, money spent on research and development will not be less than 3 per cent of total annual revenues over the coming five years.

Yang added that high mainland demand had seen the price of fertilizer grow by 10 per cent annually in the last three years.

"The price currently has dropped to 1,500 yuan (US$190) per ton, but we expect it will rebound very soon," said Yang.

The company last year exported about 1 million tons of fertilizer to markets such as New Zealand and Australia. "We will maintain our export levels although consolidating our position in the domestic market is our top priority," Yang said.

Source:佚名