CITIC Guoan Casts Stakes on Qinghai Salt Lake

'Funds that are raised from non-public A-shares will be used in the project for the comprehensive utilization of Guoan salt lake resources in Qinghai province, operated by Qinghai CITIC Guoan Sci-Tech Development Co., Ltd. (Qinghai Guoan),' said an executive from CITIC Guoan Information Industry Company Ltd. (SZ: 000839) which owns 51% equity of Qinghai Guoan. 'The project will become an important item in the future development of the company. With the gradual progress of the project, the revenue scale, the profit-making level and the net cash flow of the company will maintain a sustained stable growth.'

    According to the estimates made on the basis of the present market status, Qinghai Guoan can accomplish a profit of RMB70 - 100 million in 2006 and a profit of around RMB200 million in 2007. After the completion of the project, the annual profit will reach more than RMB500 million. Qinghai province is a large province in the western region of China.

The salt lake project is making smooth progress

The project for the comprehensive utilization of the West Terrace Ginar Salt Lake in Qinghai Guoan is making smooth progress in production. The 300 000 t/a potassium/magnesium sulfate fertilizer production line started trial production at the end of July 2005 and had produced more than 40 000 tons of qualified product by the end of 2005. It managed to make profit in the same year of completion. The 35 000 t/a lithium carbonate production line and the 50 000 t/a boric acid production line started construction on November 5th, 2005. (CCR2005, No. 34) The 35 000 t/a lithium carbonate production line completed trial production in April 2006. It is said that the cost of lithium carbonate produced in the production line is less than RMB10 000 per ton and the selling price can reach RMB50 000 per ton.

    Qinghai Guoan is busy with the salt field construction today. More than 50 km2 of various salt fields, 28.28 km of flood dams, 16 km of brine collecting channels and 10 km of water division canals have been constructed. 33.3 million m3 of brine filling has been conducted and nearly 4.0 million tons of potash mixed salt has been produced.

    Besides, principal buildings of the project and matching facilities including water, power, road and steam are also basically completed. Qinghai Jinxing Mining Co., Ltd. will provide fresh water for the company. The water purification unit constructed by Qinghai Guoan itself is already completed and has started normal water supply. The first group of gas-fired generating sets have completed debugging and started power generation. The 85 km highway from the West Terrace to the East Terrace has been constructed. No. 315 National Expressway under construction passes the West Terrace Ginar Salt Lake region and will be open to traffic in October 2006. The double-track railway from Xining to Germu will be open to traffic on July 1st, 2006. As the company was included in enterprises with priority for transportation in Qinghai in 2006, the provincial government and railway departments will guarantee the transportation of products in the company. The 85 km natural gas pipeline from Sebei Gas Field to the West Terrace terminal has started gas transmission.

The technology of comprehensive development holds a leading position

Qinghai Guoan plans to put a total investment of RMB2.294 billion in the development of lithium, potassium and boron resources in the West Terrace Ginar Salt Lake and acquire a production scale of 1.0 million t/a potassium sulfate, 50 000 t/a boric acid and 35 000 t/a lithium carbonate.

    'High-valued elements such as lithium, potassium, boron and magnesium are contained in the brine of the West Terrace Ginar Salt Lake,' said an executive from G Guoan. 'The liquid reserves are equivalent to 26.56 million tons of potassium chloride, 1.63 million tons of lithium chloride, 3.08 million tons of boron oxide, 185.97 million tons of magnesium chloride and 245.90 million tons of sodium chloride. According to the verification made by effective resources methods, while guaranteeing a service period of no less than 20 years the total development scale can reach 1.05 million t/a potassium/magnesium fertilizers. The salt lake can be a sustained stable lithium salt base with a potential economic value of RMB170 billion.'

   CITIC Guoan Group holding a leading position in the communication sector launched research on the comprehensive development and utilization of brine resources in Qinghai salt lakes from 2000 and successfully removed technical bottlenecks in the separation of magnesium and lithium from salt lake brine with a high magnesium/lithium ratio.

   Qinghai Science and Technology Department has conducted technical appraisal to the commercial production tests made by Qinghai Guoan. The appraisal proves that 'the project has for the first time in history used sulfate brine resources in the Qaidam Basin and achieved the commercial production of sulfate potassium fertilizers. It has filled a gap in the potassium/magnesium sulfate fertilizers in China. The core technology of the project has reached the domestic leading level and the overall level of the project has reached the world advanced level. '

   Regarding the sales of potassium/magnesium sulfate fertilizers, Qinghai Guoan has selected 17 agents in 20 provinces and the amount of orders in purchase agreements has already reached more than 700 000 tons. During the potash fertilizer trial production period in 2005, Qinghai Guoan accomplished a net profit of over RMB10 million. In the production of lithium carbonate and boric acid, 'FMC of the United States and EMC of Canada have conducted several field surveys to the company and the site and also made sampling tests. They have expressed their willingness of cooperation.'