2009 Ifa Fertilizerindustrychina

8/19/2019 2009 Ifa Fertilizerindustrychina

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The Chemical Fertilizer Industry in China

A Review and its Outlook

Edited by Fusuo Zhang, Weifeng Zhang, Wenqi Ma, et al.

English translation by


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The Chemical Fertilizer Industry A Review and its Outlook

Edited by Fusuo Zhang, Weifeng Zhang, Wenqi Ma, et al.


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The designations employed and the presentation of material in this information produimply the expression of any opinion whatsoever on the part of the International Fertilize

Association. This includes matters pertaining to the legal status of any country, territoarea or its authorities, or concerning the delimitation of its frontiers or boundaries.

Original Chinese version by Chemical Industry Press, China

The Chemical Fertilizer Industry in China. A Review and its Outlook First edition, English version, IFA, Paris, France, May 2009

Copyright 2009 Chemical Industry Press, China. All rights reservedISBN 978-2-9523139-5-7

The publication can be downloaded from IFA’s web site. To obtain paper copies, contact IFA.

Disclaimer“This book is an English translation by the International Fertilizer

Association (IFA) of a book published in Chinese in 2007. The

translation cannot be guaranteed to be error-free as information

translation could be corrupted, incomplete, lost or misinterpre

does not accept liability for any errors or omissions in the con

the book as a result of the translation. If verication is requiredcontact the editors. Furthermore, as a translation of the origi

any views or opinions presented in the book are solely those

authors and should not be interpreted as an expression of opini

endorsement by IFA.”


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Editorial Board

(Names are arranged according to the Chinese phonetic alphabet)

Cao Yiping College o Resources and Environmental Science o China Agricultural

Chen Feng Chie Engineer, Shanghai Potash Engineering echnology Research Cen

Chen Li Manager o Chemical Fertilizer Department, China National ChemEngineer, Chie Editor o “China Chemical Fertilizer Inormation”

Gao Enyuan China National Chemical Inormation Centre, Senior Engineer

He Hui China National Chemical Inormation Centre, Senior Manager, ExecutivFertilizer Inormation”

Jia Lingyan Shanghai Potash Engineering echnology Research Centre, Engineer

Li Mingchuan Assistant General Manager o Shandong Qingshan Chemical Industry CLiu Li Director o Editorial Department o “Potash Fertilizer and Compound

Ma Wenqi College o Resources and Environmental Science o Hebei AgriculturaUniversity R&D Centre ([email protected])

Yuan Zhaoying Branch Director o Inormation Centre o China Inorganic Salt InduEditor o “China Kali Salt Industry”

Shen Bin Director o Agricultural Services o Sino-Arab Chemical Fertilizers Co.

Shen Jianhua Marketing Manager o China National Chemical Inormation Centre, S

Sun Aiwen Manager o Agrochemical Services Department o Sinochem CoUniversity R&D Centre

Sun Shiqing Engineering Proessor, Shanghai Futian Kali Salt echnology Co., Ltd.

ang Jianwei Director o National Phosphate Fertilizer and Compound Fertilizer InProessor

eng Jiarun China Compound Fertilizer Co-operation Network, Senior Engineer

Wang Jiaming Chuanhua Group Co., Ltd., Senor Engineer

Wang Li College o Resources and Environmental Science o Huazhong AAgricultural University R&D Centre

Wang Yaneng College o Resources and Environmental Science o China AgriculturaUniversity R&D Centre

Wei Chengguang Branch Chairman o Kali Salt rade, China Inorganic Salt Industryechnology Committee


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The chemical fertilizer industry in Chinaiv

Series of Books on the Theories andPractices of Integrated NutrientManagement

Te ancients said that knowledge resided in the tip o a writingbrush. It is, thereore, the intention o this series o books topresent a summary o the accumulated knowledge romour studies in nutrient management or more than 10 years.From the rst project o internationally advanced agriculturalscience and technology introduced by the Ministry oAgriculture in 1996, on the application o rhizosphere theoriesand regulation technologies in the exploration o new ertilizerapplication techniques to optimize the growth o major cropsin China, we have come to the totally new idea o integratedmanagement o nutrient resources today. We would like tosummarise our knowledge accumulated in this process. It isnot merely a process o accumulated quantitative change in

each and every project but more importantly, it represents achange in our mentality and a leap orward in our thinking.

Tere are at least our motivating actors that have broughtthis series o books into being that deserve special mention.Tey are as ollows:1. Te very rapid socio-economic development in China

improved the well being o the Chinese people. However,large quantities o plant nutrients applied to increase cropproduction have also resulted in negative effects on the

environment and people’s lives. Optimizing plant nutrientuse, and increasing the effi ciency o resources have becomea matter o major concern with regard to agriculturaland social development, particularly with respect to theenvironment and sustainable development. We are ortunateto be given the opportunity to shoulder the national mission

di l ti t thi i t t i thi

technology, administratiolarge enterprises. A team more than 80 organizationwas ormed. In addition, and technologies o advaStates, Great Britain and Gas the International Ricethe International FertilizWe carried out systemadifferent angles on the theointegrated nutrient managsystems o 12 crops that becarried out a large amount and extension work. Te pthe synthesis and outputs o

3. Since the second nationwidneed or a key project to tac

country. Te important intthe introduction o integrthe establishment o its tlaunched because o the spunder avourable circumshard-to-come-by opportuimmersed in an atmospherthe right time and this is aAll o us had a common

the rapid socio-economithe protection o its envirhistorical contribution bynutrient management in othe effi ciency o nutrient usdevelopment o China’s a

t d i i ti th t

Preface


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able to share these experiences and lessons learned witheveryone.

4. With the rapid socio-economic development in Chinaand the continuous improvement in the living standardso its people, integrated nutrient management will setthe guidelines and technological measure or its adoptionor increased crop production, increased effi ciency in theutilization o resources and environmental protection.At the agricultural production levels, the core o nutrientmanagement will be to achieve a quantitative balancebetween nutrient absorption during the entire growth

period o a crop, that is, the effective supply o nutrientsin the soil in synchrony or regulated and controlled inthe root zone. At the regional and national levels, it isimportant to achieve a win-win situation or productionand environment by quantiying, regulating and controllingthe ow o nutrients in the ood chain system: “resources –chemical ertilizer – armland – animal husbandry – amily– environment.” Trough our work in these two aspects,with the efforts o our colleagues in plant nutrition andrelated disciplines, we hope to achieve great innovation inthe technology o nutrient management while raising itslevel. We truly believe that the ideas expressed in this serieso books will orm an important guide in the sustainabledevelopment o Chinese agriculture and society in theuture.Te ollowing books will be included in our planned series:

(1) “Integrated Nutrient Management” (2) “Outline o the

echniques o Fertilizer Appests” (3) “Crop Fertilizatio

to the Teories and echnManagement” (5) “TeorieRice Cropping in China” (Integrated Nutrient Manag“Teories and Practices in thor Rice” (8) “Teories and PManagement or Flue-curPractices in the Integrated rees in Northern China” (

Integrated Nutrient ManageFruit rees” (11) “TeoriesNutrient Management or th(12) “Teories and PractiManagement or VegetableIndustry in China – A RevieFlow and Strategies in the Production and ConsumptNutrient Management andO these, “Integrated Nutriin March 2003 and “OutlinApplication by FormulationTe other drafs will be pub

Zhang FusuoAugust 2006


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in China. Tis is the contribution rom the Kali Salt radeBranch o China Inorganic Salt Industry Association. Chapter

5, a contribution rom Sino-Arab Chemical Fertilizers Co.,Ltd. and the China Compound Fertilizer Network deals withthe state o development o the compound ertilizer industry.In Chapter 6, the College o Resources and EnvironmentalScience o China Agricultural University writes about thedevelopment o new types o ertilizers in China, in particular,slow/controlled-release ertilizers and oliar ertilizers. Chapter7, written by Sinochem Corporation, gives a descriptiono the system o ertilizer circulation and policy changes

in China while in Chapter 8, the College o Resources andEnvironmental Science o China Agricultural University gives

an account o the outlook odemand, the enterprises in

Te present book hasintegrated by Zhang Fusuowritten by more than 30 spSidai. Owing to our limitecareless omissions and we sireaders.

Editor

March 2007


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The chemical fertilizer industry in Chinaviii

Contents

Editorial Boardiii

Preface iv

From the Editor vi

List of Tables xii

List of Figures xiii

List of Acronyms, Symbols and Abbreviations xiv

Chapter 1

Strategic Position of the Chemical Fertilizer Industry in China 1

1.1 The fertilizer industry provides the fundamental assurance of food security 1

1.2 Chemical fertilizer is the base material for the improvement of nutritional standards 1

1.3 Chemical fertilizer is an important factor in increasing farmers’ income 2

1.4 Chemical fertilizer production can aggravate the shortage of resources and cause tension i

1.5 The inappropriate application of chemical fertilizers can cause environmental pollution 3

Chapter 2China’s Nitrogen (N) Fertilizer Industry: Development and Outlook 4

2.1 Technological development of the nitrogenous (N) fertilizer industry 4

2.1.1 A technological review of China’s N fertilizer industry 4

2.1.2 echnological breakthroughs and important inventions in the N fertilizer industry 6

2 1 3 C i f Chi ’ l l f t h l f N f tili ith th t i d d t


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The chemical fertilizer industry in Chinax

4.6 The external environment in the development of the K fertilizer industry in China 110

4.6.1 Characteristics of China’s K resources and transport of K fertilizers 110

4.6.2 Te K fertilizer market in China110

4.6.3 Policies, laws and regulations 114

4.6.4 Analysis of the inuences on the domestic K fertilizer industry and the outlook 114

4.7 Suggestions and prospects for the development of the K fertilizer industry in China 115

4.7.1 Importance attached to the prospecting and exploitation of bittern K deposits 115

4.7.2 Expediting the establishment of domestic K fertilizer production bases in China 115

4.7.3 Active and sound promotion to establish bases of K fertilizer production and supply o

4.7.4 Purchase shares or holdings of foreign companies that own K mines 116

4.7.5 More aggressive investment in the exploitation and utilization of insoluble K resource4.7.6 Implementation of large-scale operations 116

4.7.7 Unied brands of K fertilizer 117

4.7.8 Emphasis on comprehensive development 117

4.7.9 Enhancement of studies on soil K 117

4.7.10 Perfecting the distribution and management systems of chemical fertilizers 117

4.7.11 Strengthen the standards system and ensure the quality of K fertilizer 117

4.7.12 Enhancement of publicity and recommendations of KNO3

, KH2

PO4

and K-Mg fertil

4.7.13 Adopt measures to protect salt lake resources 118

Chapter 5

The Development and Prospects for Compound Fertilizers in China 119

5.1 The development of the compound fertilizer industry and industrial technology 119

5.1.1 Denition of a compound fertilizer 119

5.1.2 Present state of compound fertilizer development in China 119

5.1.3 Classication of compound fertilizers 120

5.1.4 Production techniques and products of compound fertilizers in China 121

5.1.5 History of the development and characteristics of compound fertilizers in China 124

5.1.6 echnical innovation of compound fertilizers in China 126

5.1.7 Outlook for technology and product development of compound fertilizers 127

5.1.8 Problems in the industrial development of compound fertilizers and strategies to reso

5.2 Enterprises of compound fertilizers in China and their products 132

5.2.1 Present status and characteristics of enterprises 1325.2.2 Prospects of development 133

5.3 Compound fertilizers and agrochemical services 134

5.3.1 Systems of agrochemical services of compound fertilizer enterprises overseas 134

5.3.2 Development of agrochemical services in China and their difference from foreign mo

5 3 3 Prospects of development of agrochemical services 138


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6.1.5 Outlook for technological development 149

6.1.6 State of development of the S/CRF industry 150

6.1.7 External environment of the S/CRF industry152

6.2 General development of the foliar fertilizer industry in China 154

6.2.1 History of the development of foliar fertilizer 154

6.2.2 Functions and status of foliar fertilizer in agricultural production 154

6.2.3 Course of development of the foliar fertilizer industry in China 155

6.2.4 Course of development of foliar fertilizer products 155

6.2.5 External environment for the development of the foliar fertilizer industry 157

6.2.6 Summary of the historical experience in the development of the foliar fertilizer in Ch

6.2.7 Progress in the study of the foliar fertilizer technology 1596.2.8 Market situation for foliar fertilizer 162

6.2.9 Prospects of the foliar fertilizer industry in China 162

Chapter 7

The Chemical Fertilizer Marketing and Distribution System in China 164

7.1 Present state of the domestic fertilizer distribution system 164

7.1.1 Framework of the domestic fertilizer distribution system 1647.1.2 Characteristics of the domestic fertilizer distribution system 165

7.1.3 General situation and characteristics of import and export of chemical fertilizers 16

7.2 Development of the fertilizer distribution system 169

7.2.1 Stage of completely planned management and evolution of its policies 169

7.2.2 Stage of combination of planned and market management and evolution of its polici

7.2.3 Stage of market deployment of resources and evolution of its policies 178

7.3 Effects of joining the WTO on the system of fertilizer distribution in China 1837.3.1 Unfavourable effects on the system of fertilizer distribution 183

7.3.2 Favourable effects on the system of fertilizer distribution 185

Chapter 8

The Medium and Long-term Development Outlook of the Chemical Ferti

8.1 Development of the international fertilizer industry 187

8.1.1 State of development of N fertilizer 187 8.1.2 State of development of P fertilizer 190

8.1.3 State of development of K fertilizer 191

8.2 Development outlook of the chemical fertilizer industry in China 192

8.2.1 Nitrogenous fertilizer 192

8 2 2 Ph h t f tili 192


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The chemical fertilizer industry in Chinaxii

List of Tables

Table 1-1 Raw material consumption for fertilizer production in China: 2005 3

Table 2-1 List of Chinese enterprises that import large installations for N fertilizer production 13

Table 2-2 Apparent consumption of urea in China: 1995-2005 24Table 2-3 Import and export of urea in China: 1981-2005 26

Table 3-1 Output of phosphate fertilizer products in China: 1955-2005 34

Table 3-2 Statistics on phosphate compound fertilizer enterprises in China:1987-2005 54

Table 3-3 List of newly branded phosphate compound fertilizer products in China in 2005 58

Table 3-4 The top four phosphate fertilizer (P2O

5) producing provinces in China in 2005 59

Table 3-5 Order of DAP, MAP & NPK output by province in 2005 59

Table 3-6 Phosphate fertilizer output of the top 10 enterprises of China in 2005 59

Table 3-7 Top 10 producers of DAP, MAP and NPK compound (mixed) fertilizer in 2005 60Table 3-8 Apparent consumption of phosphate fertilizer (P

2O

5) in China: 1980 to 2005 70

Table 3-9 Volume of exports of phosphate fertilizer and prices in China 73

Table 3-10 Historical output of raw materials for the production of phosphate fertilizers 74

Table 3-11 Export of phosphate rock by China in 1995-2005 76

Table 3-12 Volume of sulphur imported by China and the average CIF price from 1998 to 2005 7

Table 3-13 World output of elemental sulphur and forecasts: 2001-2008 78

Table 4-1 Distribution of soluble potassium resources in China 110

Table 4-2 Potash fertilizer (K 2

O) consumption in China: 1980-2005 111

Table 4-3 Demand forecast for K fertilizer during the period 2010-2020 111

Table 4-4 Historical production of MOP in China: 1986-2006 111

Table 4-5 Production capacity and output of SOP and KNO3: 1980-2006 112

Table 4-6 Historical import volume of KCl during the period 1981-May 2006 112

Table 4-7 Historical changes in the import of SOP in China 112

Table 4-8 Historical changes in the import of KNO3 in China 112

Table 4-9 Historical changes in the import price of KCl 112

Table 4-10 Historical changes in KCl imports at different periods 113

Table 4-11 Price of imported chlorine-free K fertilizers in recent years 113Table 5-1 Consumption of compound fertilizers and their ratio to total chemical fertilizers used

Table 6-1 Speed of development of S/CRFs and its proportion to traditional chemical fertilizer 1

Table 6-2 Domains of consumption and proportion of S/CRF in some countries and regions in 20

Table 6-3 Price of some S/CRF products 153

Table 6-4 Comparison between input and production when urea and S/CRF are applied on rice


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List of Figures

Figure 1-1 Trends in chemical fertilizer consumption, total grain production and production pe

Figure 1-2 Components of production costs for the three major grain crops (rice, wheat and mFigure 2-1 Production and agriculture consumption trend of nitrogenous fertilizers in China: 1

Figure 2-2 Urea retail price trend from 1996-2005 25

Figure 4-1 Methods of domestic MOP production 89

Figure 4-2 Processes and methods of SOP production in China 92

Figure 4-3 Main methods of KNO3 production 94

Figure 4-4 Methods of potassium dihydrogen phosphate production in China 96

Figure 5-1 Model of agrochemical services of a foreign fertilizer enterprise 135

Figure 5-2 Flow of agrochemical services in some Chinese companies 137 Figure 6-1 Production process of foliar fertilizer in aqueous solution 159

Figure 7-1 Framework of the fertilizer distribution system in China 164

Figure 8-1 Trend of international raw material prices 190

Figure 8-2 Analysis on the extent of effects of policy changes on the chemical fertilizer industr


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The chemical fertilizer industry in Chinaxiv

List of Acronyms, Symbols and Abbreviations

(as used in this book)

Acronyms

CIDA Canadian International Development Agency CIRAD Centre de Cooperation Internationale en Recherche Agronomique pour l

(Agricultural Research Center or International Development)CNFIA China Nitrogen Fertilizer Industry AssociationCPFIA China Phosphate Fertilizer Industry AssociationEEC European Economic CouncilEU European Union

FAO Food and Agriculture Organization o the United NationsIFA International Fertilizer Industry AssociationIFDC International Fertilizer Development CentreIPI International Potash InstituteISO International Organization or StandardizationNDRC National Development and Reorm CommissionPPI Potash and Phosphate Institute o Canada (now International Plant NutriPRoC People’s Republic o China

SACF Sino-Arab Chemical Fertilizer Co., Ltd.VA ennessee Valley Authority UNESCO United Nations Educational, Scientic and Cultural OrganizationUSA United States o AmericaWO World rade Organization

Symbols

Al2O3 aluminium oxideB boron°C degree CelsiusCa calciumCaCO

3 calcium carbonate

Ca5F(PO

4)

3 uorapatite

C (H PO ) H O l i dih d h h t


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H2PO

4- dihydrogen phosphate

H2SO

4 sulphuric acid

K potassiumK2O potassium oxide (potash)

KCO3 potassium carbonate

KCl potassium chloride (or muriate o potash (MOP))KH

2NO

3 potassium dihydrogen nitrate

KH2PO

4 potassium dihydrogen phosphate

KNO3 potassium nitrate

K2SO

4 potassium sulphate (or sulphate o potash (SOP))

Mg magnesium

MgO magnesium oxideMgSO

4 magnesium sulphate

Mn manganeseN nitrogenNaCl sodium chlorideNH

3 ammonia

NH4

+ ammoniumNO

2 nitrogen dioxide

NO3

- nitrate

NOx nitrogen oxidesNPK nitrogen-phosphorus-potassiumP phosphorusP

2O

5 phosphorus pentoxide (phosphate)

S sulphurSiO

22- silicon dioxide

SO3 sulphur trioxide

SO4 sulphate

Zn zinc

Abbreviations

ABC ammonium bi-carbonateAC ammonium chlorideaMDEA activated methyldiethanolamineAN ammonium nitrate

AP ammonium phosphateAPP ammonium polyphosphateAS ammonium sulphateB billionBB bulk blendedBt billion metric tonnesC l l i


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The chemical fertilizer industry in Chinaxvi

km kilometerkWh kilo watt hour

L litreM millionm3 cubic meterMAP mono-ammonium phosphatemg/l milligram per litremm millimeterMOP muriate o potash (or potassium chloride (KCl))MPa megapascalMt million metric tonnes

mu 15 mu = 1 hectare (1 mu=0.0667 ha)MW mega wattNP nitrophosphatePAPR partially acidulated phosphate rock PR phosphate rock PRSF pipe reaction spray uidizationPVC polyvinyl chlorideRMB Renminbi (Yuan)R & D research and development

S/CR slow/controlled-releaseS/CRF slow/controlled-release ertilizerSCU sulphur-coated ureaSOP sulphate o potash or potassium sulphateSRF slow-release ertilizerSSP single superphosphateSPP sodium tripolyphosphateSyngas synthetic gases

t metric tonne trillionUAN urea ammonium nitrateµm micrometerUS$ US dollart/d metric tonne per day SP triple superphosphatet/y metric tonne per yearVA value added tax

y year


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ertilizer, and their total pmany experiments by the ertilizer institutes indicatethe yield per unit area o rwinter crops such as wheatby almost 20%. Calculationetwork experiments ind

production rom 1986-199ertilizer application. Beyothe undamental material tproduction and ood secuNobel Prize winner and thNorman Borlaug (1998),

d ti t t

Te rapid socio-economic development in China is atan important stage o transition. Te comprehensiveestablishment o a airly well off society is acing a majorchallenge posed by energy, resources, environment andthe three agricultural issues or problems, the agricultural villages (Nong Cun), armers (Nong Min) and the agriculturalindustry (Nong Ye) reerred to as the problem o “San Nong.”As a special industry involving resources and energy, affectingthe “San Nong ” problems and the quality o ecological

environment, the chemical ertilizer industry is acingpressures and opportunities hitherto unknown to China.

How to realize the healthy development o the ertilizerindustry, coordinate the supply and demand o chemicalertilizers and balance between increasing agriculturalproduction on one hand and resources, energy andenvironmental saety on the other are matters o greatimportance to the achievement o sustainable development.

Since 2004, the Chinese government has been reviewingits policy or the ertilizer industry and a major reorm othe industry is imminent. In order to cope with the presentsituation, one needs to have a well-ounded knowledge o theimportant position o the ertilizer industry in China and itsdirection o development.

1.1 The fertilizer industry provides the

fundamental assurance of food securityTe Chinese say: “With ood in hand, you have peace omind.” China is the most populous country in the world;thereore, guaranteeing ood supply is the most importantchallenge to agriculture in the national economy. China has

d t d 21% th ld’ l ti ith l 9%

Chapter 1Strategic Position of the Chemical Fertilizer Industr

Figure 1-1 Trends in chemgrain production and prod

0

10

20

30

40

50

Mt nutrientsFertilizer consumption

1 9 5 6

1 9 7 6

1 9 6 6


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The chemical fertilizer industry in China2

the our problems that de

development o agriculture the problem o price increasehighest in the list. 34.8% oabout by grain price increareducing the effect o the parmers. According to the CPolicies o the Chinese Acado agricultural resources topaffecting the armers. It is National Development andrelevant departments ormulto promote circulation, guarastability.

1.4 Chemical fertilizeaggravate the shorta

cause tension in eneChemical ertilizer productioand it is a high-energy conshows that, in 2005, chemicaconsumed about 100 Mt o st

ti id

the use o chemical ertilizer provides 40% o the nitrogenrequired by mankind, and in China, this proportion is as high

as 54%.In traditional agriculture, biological nitrogen xation canonly provide 120-150 kg N/ha. Each hectare o land can onlyprovide 200 kg o protein which is suffi cient to eed six orseven vegetarians. Whereas modern agriculture in developedcountries that uses chemical ertilizer, ertilizer is able toproduce 600-800 kg o protein per hectare o land and thus,can eed 20 to 30 people.

Although the per unit area crop yield in China is relatively

low, afer using chemical ertilizer, protein output or the threemajor grain crops (rice, wheat and maize) is 440-619 kg/ha.However, when the multiple crop index o 150% is taken intoconsideration, the annual protein output o China’s cultivatedland is even higher than in developed countries, and it mayreach 660-929 kg/ha. Tis is why China can eed 21% o theworld’s population and improve the standard o living itspopulation.

It is estimated that China’s population will reach 1.4

billion by 2010 and 1.5 billion by 2020 (Decision o the StateCouncil o the Central Committee o the Chinese CommunistParty Concerning the Overall Enhancement o PopulationPlanning and Birth Control in Resolving the PopulationProblem). According to basic needs (per capita grain rationo 400 kg) in the year 2007, grain requirement in 2010 and2020 will be 500Mt and 580Mt respectively. However, whenthe requirement or improving people’s nutrition is taken intoconsideration, grain demand will reach 640Mt in 2020. Whereincreasing the cultivated area is diffi cult, the only choice oraddressing ood security is to increase the yield per unit areao grain crops, and one o the most important measures toachieve this is through the use o ertilizers.

1.3 Chemical fertilizer is an importantfactor in increasing farmers’ income

Te “San Nong ” problem o increasing armer’s income isa priority or the State and government. Te developmenttrend in the ertilizer industry has important effects onarmers’ income which cannot be ignored. Statistics o “Te2006 Collection o Nationwide Costs and Benets o FarmP d ” il d b th P i D t t th N ti l

Figure 1-2 Components of pmajor grain crops (rice, whea

Chemical

fertilizer

Manpower

cost 42%

23%


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1. Strategic position of

is polluted, and 64% o urpollution which threatens

61% o inland lakes becomoccurs requently in the conational ecological security

Economic losses causeaccount or 1.46-2.84% o thAlthough such pollution ertilizer, the large quantinutrients used and their imthe possibility o environm

Pollution by chemical eo greenhouse gases. Curremissions in China is thChemical ertilizer prodo carbon dioxide, nitrmanuacturing are major is going to be a thorny envin the uture. Furthermoreproduction o chemical er

severely affect air quality anthe expansion o the hole in(NO

2) can also orm partic

and eye diseases. Tey mayacid rain which has immeaenvironment.

At present, the ertilimportant industry posse value o RMB280 billionarm production, animal hindustries and even the industry in the uture. Incthe use o chemical ertili(M) nationwide. It is alsincome, environmental qand ecological saety. Teestablishment o a relative

healthy and sustainable devrequires the joint efforts oworkers in the eld o scienbe enhanced exchanges, mcontinuous provision o hias contributions to nationa

i lt l ill

Table 1-1 Raw material consumption for fertilizer productionin China: 2005

Raw Material Consumptionfor FertilizerProduction

Proportion ofFertilizer ProductionConsumption against

DomesticConsumption (%)

Phosphate ore (stan-dard ore)

4.306×107 t 73

Sulphur (elementalsulphur)

1.143×107 t 69

Potassium (K 2O) 1.56×106 t 95

Oil (crude oil) 2.44×106 t 8

Anthracite (standardcoal)

3.426×107 t 13

Bituminous coal(standard coal)

1.061×107 t

Natural gas 1.01×1010 m3 31

Electricity 5.89×1010 kW h

Comprehensiveenergy consumption(standard coal)

1.00×108 t 5

Note: The amounts of resources consumed in fertilizer productionare calculated according to the actual volume of consumption perunit product of Chinese fertilizer enterprises and total fertilizeroutput.

1.5 The inappropriate applicationof chemical fertilizers can causeenvironmental pollution

Inormation and data rom the National Bureau o Statistics oChina indicate that the annual production and consumptiono chemical ertilizers has reached 50 Mt, the highest levelin the world. However, due to the low quality o ertilizer

products and poor ertilizer application techniques, the useeffi ciency o nitrogenous ertilizers is less than 30%. Besidescausing tremendous economic losses, this has also led toenvironmental pollution.

According to estimates, the value o nitrogenous ertilizerslost each year in China is above RMB40 billion (B). Te loss

i l t t d t th t h It i


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2. China’s nitrogen fertil

2.1.1.2 Experiences and technical development o

Te main experiences anddevelopment o the N ertmaterials. Te developmenevolved with coal as the rcompete internationally. Teoil and gas as raw materialtechniques did not meet thand market prospects, thus carry out technological reo

Te period rom the init1960s saw the beginning o As the ability to manuactlimited, it was thought thatthe raw material or manuamove. Tese raw materialsgas, anthracite and lignite.

Based on experience, itlignite using boiling urnac

environment and to water sconcentrated on manuactuwas a limited resource at twith anthracite as raw materdevelopment o medium anthe county, city and provinera or the synthetic ammo

In retrospect, using antxed-bed batch gasiers reasonable as that resolveertilizer industry in China.

With the advancement major problems appeared w

Firstly, the singular suppsyngas was manuactured However, only the provinresources (it was only lat

the province o Guizhou aNingxia) and this resultedmedium-sized N ertilizer anthracite rom Jincheng inmeant high transport costs,and high cost o raw materi

d th diti

their introduction played a very important role in raisingthe standard o production techniques and management in

the ertilizer industry in China, placing the country amongthe ront runners in the world N ertilizer industry. Teseimported production plants can be classied in three typesaccording to patents:1. Te Kellogg traditional process, the Kellogg EC process,

the opsoe process, the AMV process, the Brown techniqueand the KBR technique that use natural gas and naphtha asraw materials;

2. Te exaco process and the Shell process that use residuum

(see 2.3.3.1 (3)) as raw material;3. Te Lurgi gasication process and the exaco coal water

slurry gasication process that use coal as raw material.Tese processes gather together the world’s major

technologies o synthetic ammonia processes. Urea technologyincludes the Stamicarbon CO

2 stripping process, the Mitsui

oatsu-oyo process improved method C, the SNAM ureaprocess and the ACES process.

Between 1980 and 1990, another 18 large N ertilizer plants

were imported successively. Tey used residuum lump coal,coal water slurry and natural gas as raw materials. Advancedtechniques o ammonia production by:• German Uhde Company - ICI method o oil eld gas

conversion by steam• German Lurgi - continuous vaporization o bitumite pure

oxygen,• oyo process Shell method o Japan - rom residuum• Ube exaco o Japan - rom coal water slurry and• German Linde exaco - rom exaco residuumwere adopted or the establishment o large ammonia plantsin Puyang o Henan Province, Lucheng o Shanxi province,Jinxi o Liaoning Province, Jianeng in Chongqing, Hejiango Sichuan Province, Jiujiang o Jiangxi Province, Hohhot oInner Mongolia and Lanzhou o Gansu Province. Te annualsynthetic ammonia production capacity o all these plantsreached 300,000 t.

Afer more than 20 years o importing technology and large-scale development, tens o billion US dollars have been spent.However, through these plants, several billion US dollars werealso saved rom the importation o chemical ertilizers alongwith the benets o building N ertilizer production plantswith international standards. In addition, they have given ani t t tl i th d ti d ti t h l


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2.1.2 Technological breimportant inventions in

2.1.2.1 Manuacturing am(ABC) by the synthetic amprocessTe birth and development decided by the economic conto cater or the urgent needaccording to instructions roPeng ao, the Minister or

pointed out that besides higho construction which were rand AN, lead and stainless not comply with the situatiothe strategic concept o smaexperiments by agricultural that ABC had better ertilizinscheme o yearly production in combination with 40,000

the Ministry o Chemical Indto directly carry out carboniuse o the reaction betweengas that contains more CO

2 a

puriying the synthetic ammused.

Te renowned chemist team to conduct experimensuccess in 1965. He introdbase manuacture by merginthe production o synthetictechnology o manuacturingo synthetic ammonia by csynthetic ammonia productthe CO

2 in syngas by water.

with ammonia-water insteadproduced during synthetic a

ammonia-water that replaIn this way, ABC is producenabling the combination owith the ammonia proceso establishing small N ersuch as stainless steel are ni t t

environment. An atmospheric pressure and xed-bedgasication oven enriched with oxygen and oxidation has

been developed. Tis gives better results and improves theproduction environment.Currently, coke and anthracite are the most common raw

materials or synthetic ammonia production in China. Tereare limited sources o these and their technical and economic values are poor. In order to develop the chemical ertilizerindustry on a large scale, China has begun looking or waysto increase production o cheap hydrogen and expand thesources o raw materials or synthetic ammonia. When much

attention was being paid to testing the gasication o granularcoal, it was ound that manuacturing synthetic ammoniawith heavy oil, crude oil and natural gas could simpliythe process and equipment, reduce the amount o rawmaterials transported, acilitates increased automation, saveinrastructure investment and lower production costs. Tiswas one o the paths taken in the subsequent developmento the N ertilizer industry. Around 1970, there were largends o petroleum and natural gas resources in China and

efforts were devoted to developing the N ertilizer industrywith natural gas and petroleum products as raw materials.Due to an erroneous assessment o gas exploration in SichuanProvince, the very small gas production was insuffi cientor any to leave Sichuan. As a result, our N ertilizer plantsor which natural gas was planned were orced to switch tonaphtha as raw material. As naphtha was in short supplyand its price was high, all our plants suffered severe losses.Currently, each plant is running at an annual loss o aboutRMB100 M and they have no choice but to switch to coal asthe raw material which requires a huge investment. Teseare lessons that should be borne in mind when planning andbuilding N ertilizer plants in uture.

In summary, the major problems o the N ertilizerindustry included the irrational structure o raw materials,high transport costs and the numerous small-scale Nertilizer plants. Owing to the continuously rising petroleum

prices, small, medium and large scale N ertilizer plants thatdepend on high-priced oil as raw material have to carry outrevamping by switching to natural gas and powdered coal asraw materials. For enterprises that use anthracite, they willhave to use local cheap coal and advanced coal gasicationtechnology. Large and medium-sized N ertilizer plants will

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At the end o 1964, CDeputy Chie Engineer HNumber One Design InstiIndustry put orward the uuse o three catalysts (zinc otemperature conversion caor manuacturing synthepurication. In the spring oIndustry organized the relevcampaign and the Dalian InChina Academy o Sciences

in the ormulation and methand one desulphurizer. TChemical Industry was puprimary particle catalyst anPilot Plant took charge o ethe catalyst plant o Nanjingo trial production and actuexamination and vericatiowas good. In October 1966,

Shijiazhuang Fertilizer Planammonia by the puricatiocompleted and went into op

From 1964-1968, as onedeveloped the new techncatalysts, Huang Hongyu research, pilot test to adproduction plants. He ounperormance o methanatioccurring diatomite as cdiatomite with alumina to aand to acilitate the recovecatalyst wastes. With regarHongyu advocated CO

2 r

conversion. Te plants thaton steam and reduce consmethanation. With regard

many ideas or improvemendesulphurization pump, chaspring structure to single spto a hal-open one and addito solve the problem o bDuring production, he solv

i i t

operational on May Day. Te process ran smoothly, producingthe rst batch o ABC ertilizer. Provincial cities adopted thecomplete set o equipment with xed design and standardizedmanuacturing. 13 sets o N ertilizer experimental plants atthe county level were built. From gasication with coal andcoke to the production o ABC, the wide spread adaptabilityo this new technology was urther tested in order toachieve commercialization and promotion to other areas.Experiences o these plants were noted. At the beginning o1958, Shanghai Research Institute o Chemical Industry andBeijing Chemical est Plant established experimental plants

with annual capacities o 2,000 t and 10,000 t respectively.Subsequently, Dalian Chemical Industries Limited built asmall experimental plant capable o an annual production o800 t o synthetic ammonia and ammonia-water. From 1959to 1960, a total o 200 domestic N ertilizer plants with smallannual production were built one afer another.

In the midst o carrying out their pilot tests, due toinsuffi cient skill in the gasication operation, the compositiono effective gas was slightly low while CO

2 was slightly high. In

addition, there was a serious problem o ammonia leakage inthe process such as absorption o ammonia by carbonisationand product separation, causing an imbalance o ammonia andCO

2 in the entire system. Afer carbonisation, the conversion

gas still had a large volume o CO2 being brought to the process

o copper washing, causing overloading. Afer purication,the microelement index could not reach the technologicalrequirements and the method o carbonisation was almostabandoned at its early stage. Trough his experiments andresearch, Hou Debang put orward operational conditionsand parameters to resolve ammonia absorption and thecarbonisation process leading to stable and high production.He introduced the method o reducing the temperature oABC and other measures that raised the stability o ABC.He gave guidance to various places in carrying out properexperiments and at the Danyang Chemical Fertilizer Plantin Jiangsu Province, he was the rst to solve the balance

between CO2 and ammonia, achieving the objectives o stableand high production and low energy consumption. Tismarked the success o the new technology o manuacturingABC by the technical process o synthetic ammonia throughcarbonisation. Te technology was immediately promotedthroughout the country and more than 1,000 plants were builti i S l t t t d th i it


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studied a set o totally npressurized gasication lowdesulphurization decarbonisdiameter gas stream converturea production by ull circumission o designing and mao coal grinder, gasication accomplished. In June 1993, o the Lunan Chemical Fertits total investment ar loweo installations. In May an

ammonia and urea o accepproduced. In April 1994, texamination and assessmenconclusion pointed out thatgasication project design” made on the basis o exaco with stability, indicating that was worth promoting. Te process ow, operation is sta

an advanced standard comtechnology elsewhere in themethod o purication thatgasication technology andconditions or the promotion

Te synthetic ammonia anwith exibility and possessthe “disposal o three wastebeen adhered to, with very gentire project has shown gooo this set o new technologyand purication process cadevelopment o the N ertconditions o rich coal resou varieties.

2.1.3 Comparison of Ch

for N fertilizer with that

At present, the overall streertilizers and technical eqoccupies a high position technology has reached

d ith d d

imported technology and to raise the starting point in orderto catch up with advanced standards in the world. He stronglyadvocated the adoption o introduced technology andinnovation in order to achieve domestic production basedon this oundation and reduce the long term dependence onoreign countries and lif China rom the passive position odependence. He put orward the concept o “the three stepsto domestic production.” Step one, purchase the sofwarepackage or advanced technology rom oreign countries,design domestically and use equipment made in China.Step two, adopt the introduced technology to enable all

equipment to be made domestically and partially improvethe technology and process. Step three is innovation, thatis, the integration o research, design and manuacturing todevelop the application o China’s own new technology. Teimprovement and expansion o the Lunan Fertilizer Plant andthe upgrading o the old system at the Sichuan Fertilizer Plantwere accomplished through this idea o domestic production.

In the early 1960s, synthetic ammonia was obtained by usingnatural gas as raw material with a new technique that uses

methanation to replace copper washing or the puricationo syngas. When the rst plant went into production, ChenGuanrong saw the signicance o the technology to reducecost and or the establishment o large-scale ammonia plants.He looked or a methanation process appropriate to Chineseresources and suitable or large N ertilizer plants with anannual production o 200,000 t.

In 1984, together with several experts, he produced thereport “Concerning Domestic Foothold that Large SyntheticAmmonia Installations and Manuacture o EquipmentShould Be Established” which won the support o the Ministryo Chemical Industry, the State Planning Commission andthe Offi ce o the Leading Group or Important echnicalEquipment o the State Council. Arrangements were thenmade to upgrade the old system at the Sichuan Main ChemicalPlant to one that used natural gas as raw material. Te plantwas made a model project in the made-in-China programme.

In addition, a sofware package was introduced. Te NumberEight Design Institute o the Ministry o Chemical Industrycarried out engineering designs and domestic production oequipment. Tis project was built and went into productionwithout a hitch.

In the mid-1970s the exaco coal-water slurry gasicationt h i hi d i i t i I thi


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2.1.3.3 Tere is room orBasically, large N ertilizerwith imported technology a80s. Te level o technologadvanced, but when compo the same type, the level ois mainly expressed in the plants, relatively little adoplimited increase in producsame types o plants in orecapacity o 135-165% afer

domestic plants can only reao thin-wall tube in the onecatalysts and advanced heor revamping an installatiapplied over a wide range o

For medium-size N ertiinadequate use o new techor production, low load o pby the production discharg

plants, technology is relativeully supported, and ammonare relatively high. Furthermcaused by the absence o relatively serious. Conseqtechnology and enhancemregard to techniques andpromoted among N ertilizdevelop and grow in strengt

2.1.4 Technology and tdevelopment in the N

Augmentation, integratioproduction through the udifferent techniques whichan economic scale, raising

and energy, to reduce the an effective extension o thcomprehensive utilization establish environmentally-main stream or uture tecertilizer industry. It is spe

t

small-scale enterprises have little ability to protect themselvesagainst risks.

On the other hand, other countries adopt single-seriesplants applying techniques that give maximum output. Inthe course o developing large-scale synthetic ammoniaplants, emphasis is on key techniques and equipment, thatis, preparation o syngas, ammonia synthesis and syngascompressor. Tis enables the annual production to rangerom 300,000 to 450,000 t in general. In recent years, syntheticammonia plants built around the world are mostly super-largeplants with an annual production o about 600,000 t and an

annual production o urea o 1,050,000 t.

2.1.3.2 Constraints in raw material supplyTe composition o raw materials used in production bydomestic N ertilizer enterprises is varied with natural gastaking up 21%, coal coke 64% and the remaining 15% asresiduum and naphtha. Tere are 15 large N ertilizer plantsusing natural gas as raw material with 52% capacity o thetotal production capacities o large plants. Seven plants use

residuum and their production accounts or 24%; ve plantsuse naphtha, producing 17%; while coal is used by two plantsthat produce 7 % o the total rom large plants.

Among the medium-sized N ertilizer plants, those thatuse coal coke as raw material account or 62% o the totalproduction capacity, 20% or those that uses residuum and18% or natural gas as raw material. Coal coke is the main rawmaterial used by small plants.

Plants that use natural gas account or less than 10% oall the plants. Tereore, the development o enterprisesis restricted by the supply o raw materials and the lack omarket competitiveness. Te continuous rise o coal prices,natural gas, crude oil and power, the backwardness oproduction equipment and management skills, scarcity oenergy-saving type equipment, low energy effi ciency andsevere environmental pollution resulted in some domestic Nertilizer plants working below capacity with poor economic

returns.Since the 1980s, medium-sized N ertilizer plants usingresiduum as their raw material experienced supply diffi cultiesand high prices o raw materials, bringing great pressureson these plants. Tey proposed changing rom oil to coaland adopting the technology o manuacturing syngas with

l t i d i ti t t h l

10


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c. develop and apply catalysconsumption o steam;

d. the technique o radial trae. add multi-stage ash evap

or CO2 removal to reduce

. activated methyldiethanelimination low energy co

3. echniques o ammonia sya. direct addition o molecul

synthesis converter to inc

to reduce circulatory gas vwork;b. the ammonia synthesis co

and small catalyst granulethe net value o ammonia;

c. set up devices or slow blonitrogen.

4. Gas compressor

a. use the three-dimensionalb. in normal pressure coal

the low pressure section,channelling into a reciprpressure section;

c. in a medium plant, oammonia circulatory gas, compressor.

5. echnology o combined pa. the coal plant’s medium pr

the methylation and metmethanol products;

b. gas transormation combinat the same time replacingo synthetic ammonia;

c. the technique o methano

and CO2 addition to naturcombined production o ld. rom the syngas or man

extract CO or the combinmaterial to carry out prodacid and acetic oxide.

technologies, the consumption o energy and materials in thecomplete production system is reduced. Te best utilizationo relevant resources in the system, implementation o gradedutilization and circulatory utilization o energy accordingto the quality and amount o energy, implementation omatching process o energy utilization and energy demand tocarry out development o synthetic ammonia system.

In the 1960s Kellogg (United States) took the lead in thedevelopment o natural gas as a raw material with largesynthetic ammonia installations, using single-series andsteam turbine as the driving orce that lowered the energy

consumption per tonne o ammonia to 41.9GJ, a greattechnological improvement.In the 1980s, due to the effects o the worldwide energy

crisis and the rise in the price o natural gas, some patent andengineering companies competed to develop new technologiesthat were able to lower the energy consumption per tonneo ammonia to 29.3GJ. Various low-energy consumptionand large synthetic installations were set up and put intoproduction. Te actual energy consumption had achieved

the anticipated target, thus enabling the synthetic ammoniaindustry to enter a new stage o its history. Te ollowing arethe main innovations that increased production and savedenergy and which can be used or commercial production.

1.Te technology to obtain syngasa. addition o oxygen to the secondary reormer during the

conversion o natural gas to enable the amount o reormedgas to be multiplied and lower the consumption o naturalgas;

b. carry out heat exchange conversion using the high-temperature reormed gas o the secondary reormer toincrease production capacity o the reormed gas;

c. addition o a pre-converter upstream o the steam converterin order to adapt to conditions o gas conversion with rawmaterials o high carbon and increase the productioncapacity o the converter;

d. the technology o preheating burner air with ue gasin the convection section o the steam converter to saveburner uel and which is also capable o lowering the umetemperature o the converter

e. preheat the boiler water supply using conversion wasteheat or shifing reaction heat to save the consumption o

t l d i

2 Chi ’ it f til


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intellectual property rightsand investment are lower abroad has great promotiobusiness prospects.

Te N ertilizer using synow occupies a main poscontinuous and rapid devplants, annual production 150,000-300,000 t. Teir rawnatural gas are restricted bygas resources. Te produc

gradually showing its comptrend in the uture. At the techniques have made relatnewly developed gasicatiocoal-water slurry pneumademonstrations are being cpneumatic bed gasicationTe pressurized uidised o industrial development

gasication techniques will industry with technology orights to promote the comsynthetic ammonia industr

2.1.4.3 Combined produtechnologiesN ertilizer enterprises devhydrogen and carbon – mu

chemical industry and intinstallations to achieve the At this juncture, N ertilizollowing:

1. Develop combined proconditionsWhen coal is the raw m

synthetic ammonia, withogas can jointly produce chormic acid, dimethyletherboiler steam was promotepressure beore applying thpower production o steam

t i t ll k

costs and improvement o the environment. Adoption o aclean coal gasication technology to manuacture syntheticgas that is simple and easible with raw materials availablelocally is an urgent issue or the small and medium-size plantsthat produce 60% o the total N ertilizer in China.

Te coal gasication technology used in China is thewater-gas converter process where the urnace is old and thetechnology backward. Te utilization ratio is low and the priceo raw material is high. echnological reorm is badly needed.

For synthetic ammonia, the more commonly usedtechnology in China is the Shell coal dust gasication.

Te main characteristics o this technology include thestrong adaptability to the types o coal, high ratio o carbonconversion, low consumption o oxygen, high productioncapacity o a single converter, high heat effi ciency, minimummaintenance, and sae and reliable. 15 sets o coal gasicationinstallations using the Shell process were imported insuccession. O these, seven are used or the manuacture osynthetic ammonia. Shell Company provided the sofwarepackage or basic design and the rst Shell installation with

the engineering and design details completed by the WuhuanChemical Engineering Company was started-up and edwith raw materials at 3:18pm on May 17, 2006. On that day,synthetic ammonia o acceptable quality was produced. It isreported that this installation is the rst to go into productionamong the seven sets that adopt the Shell process to producesynthetic ammonia in China. It is also the rst Shell coalgasication plant or the production o synthetic ammonia inthe world. Te establishment and operation o this installation

is used, not only as a reerence by the other similar installations,it is also hailed as an example o success in adopting oreignadvanced technology to reorm the domestic conventionalindustry.

Te “oil change to coal” project implemented by the HubeiShuanghuan Science and echnology Co., Ltd. accumulateda total investment o RMB719 M. Construction work beganin June 2001. Originally, Shuanghuan produced 200,000

t/y o synthetic ammonia with high-priced heavy oil as rawmaterial. Te much cheaper coal dust rom Henan Provincereplaced the heavy oil. In terms o raw material consumption,carbon conversion ratio and heat effi ciency, the projectshowed distinct advantages over other similar techniques.According to estimates, the price difference between oil

d l d l ti th l i ti



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used the Shell dried coal duso synthetic ammonia. Te plby these three enterprises taor in 2007. By adopting the process, the production cost Te Dalian Dahua Group adPetrochemical Industry andNational Petroleum Corporto de-oiled asphalt. Te ertilInner Mongolia Chemical Feand Ningxia Chemical Plant

as raw material.Driven by progress in techalmost all the large N ertilitechnical revamps or expansenergy to increase competiti

Yuntianhua Co. Ltd. carrithat centred on increasing consumption. Originally, tammonia plant with a daily p

1970s. wo relatively big revaproduction were implementereached 1,148 t o synthetic aconsumption per tonne o more than 3 years but the inM. Te revamp increased thproduction rom 400,000 t/yo urea production rom lewith total energy consumpti

Whilst there was no increasenterprise expanded, energythe benets were increased.

Te chemical ertilizer plawas also imported in the 197two revamps have been carriand involved six items, incOn completion o the revam

ammonia increased by 1.per tonne drop by 0.12GJ. opportunity o a major reprevamp was accomplished rand energy consumption red

Te chemical ertilizer plat i S t b 1976 T

3. Development o new products based on integrated processing Many products o N ertilizer enterprises are raw materialso other chemical productions. Tey are valuable ordevelopment and utilization. Integrated processing o theseproducts can result in a series o chemical products withgood economic benets and good market potential such ashydrogen peroxide, dimethyl ether, tetrahydrouran andmethyl-carbonate.

2.2 Development of N fertilizer enterprises

2.2.1 Characteristics of the N fertilizer enterprisesin China

N ertilizer enterprises in China are divided into three typesaccording to their scale, that is, small, medium and large.sized acilities Te ormer National Economy Commission,

the State Planning Commission, the State Statistical Bureau,the Ministry o Finance and the Ministry o Labour andPersonnel jointly issued Document Jing Qi [1988] No. 240which stipulated that: Enterprises o synthetic ammonia(with methanol) with an annual production capacity oabove 300,000 t are termed as the Large I ype. Tose withan annual capacity o 150,000-300,000 t are reerred to asLarge II ype. Enterprises whose annual production capacityis 60,000-150,000 t belong to the Medium I ype. Medium II

ype reers to those with an annual capacity o 40,000-60,000t. An enterprise with an annual capacity below 40,000 t is theSmall ype.

Besides stipulating the types o synthetic ammoniaenterprises, the Document also classied enterprises intoLarge, Medium and Small types based on annual productioncapacity. Tese enterprises include those o sulphuric acid,phosphate ertilizers (ordinary calcium, calcium-magnesium),

phosphate ore and pyrite. Te ollowing is an account o thedevelopment o N ertilizer enterprises according to theirtype.

2.2.1.1 Establishment and development o largeimported N ertilizer enterprisesI th 1970 Chi i t d H ll d J d F

2 China’s nitrogen fertil


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2. China s nitrogen fertil

No. Name of Enterprise Raw Material f

Synthetic Amm1 Sichuan Chemical Main Plant Natural gas

2 Liaohe Chemical Fertilizer Plant Oil eld gas

3 Luzhou Natural Gas Chemical Industry Natural gas

4 Cangzhou Chemical Fertilizer Plant Oil eld gas

5 Yunnan Natural Gas Gasication Plant Natural gas

6 Chishui Natural Gas Gasication Plant Natural gas

7 Chemical Fertilizer Plant No. 2 of Qilu Petrochemical (withdrew fromchemical fertilizer production in 2002)

Oil eld gas

8 Zhongyuan Chemical Fertilizer Plant Oil eld gas

9 Sichuan Tianhua Ltd. Natural gas

10 Jianfeng Chemical fertilizer Plant Natural gas

11 Jinxi Main Natural Gas Chemical Plant Natural gas

12 China BlueChemical Ltd. (2 sets) Natural gas

13 Chemical fertilizer plant of Daqing Main Petrochemical Plant Oil eld gas

14 Chemical fertilizer plant of Urumqi Main Petrochemical Plant (second set) Natural gas

15 Ningxia Chemical Industry (second set) Natural gas

16 Chemical fertilizer plant of Jinling Main Petrochemical Plant Naphtha

17 Chemical fertilizer plant of Anqing Main Petrochemical Plant Naphtha

18 Chemical fertilizer plant of Guangzhou Main Petrochemical Plant(withdrew from chemical fertilizer production in 2002)

Naphtha

191 Dongting Nitrogenous Fertilizer Plant of Baling Petrochemical Industry Naphtha

201

Zhongshihua Hubei Chemical Fertilizer Plant Naphtha21 Chemical Fertilizer Plant of Zhenhai Main Petrochemical Plant Residuum

22 Chemical Fertilizer Plant of Urumqi Main Petrochemical Plant Residuum

23 Ningxia Chemical Plant Residuum

24 Jiujing petrochemical Plant Residuum

25 Chemical Fertilizer Plant of Lanhua Company Residuum

26 Inner Mongolia Guhua Fertilizer Plant Residuum

27 Synthetic Ammonia Plant of Dahua Group Residuum

28 Shanxi Chemical Fertilizer Plant Coal

29 Weihe Chemical Fertilizer Plant Coal

Table 2-1 List of Chinese enterprises that import large installations for N fertilizer production



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5.8 Mt, 15.3% o the total prthroughout the country.

With the reorm policy aninjection o capital and parand powerul energy enterpro raw materials, expansion in production technologyexperienced great changes. TPlant (presently Xinghua Groas raw material was built inthen was 50,000 t o synthe

ammonium nitrate. Afer sproduction o synthetic ammthe period 1991-1995, usinproduction capacity or srom 100,000 t to 150,000 t.“changing rom oil to gas” wexpand the production o amand the annual production reached 180,000 t and amm

total industrial output valutimes compared with that ino the Beidahuang AgricultuHeilongjiang will use heavy120,000 t o synthetic ammo200,000 t urea installation togasication using coal as raw

Supporting acilities alrevamps, enabling the prod

ammonia and urea to reach 18Enterprises ound it diffi cult heavy oil, and in 2001, the Group o Jilin Province adocontinuous gasication to caincrease in the price o anthto adopt Enders technique.and the effects were observgasication and localizatioenabling the production capbe raised rom 120,000 to 180capacity rom 200,000 t/y to correspondingly reduced by this technical revamp enable th i di t O

2.2.1.2 Medium enterprises – the cradle odevelopment o China’s N ertilizer industry Te development o China’s N ertilizer industry began withthe establishment o medium-sized plants. Beginning in themid-1950s, with help rom the ormer Soviet Union, chemicalertilizer plants o Jihua Company, Lanzhou ChemicalFertilizer Plant o PetroChina and the three chemical ertilizerplants o aiyuan Chemical Industry Group Corporation withproduction capacity o 50,000 t o synthetic ammonia and90,000 t o ammonium nitrate were set up. In addition, theydesigned their own installation with an annual production

capacity o 75,000 t and set up the Sichuan Chemical Plantto produce ammonium nitrate. A xed design or a yearlyproduction o 50,000 t o synthetic ammonia was drawn up.During the 1960s, the synthetic ammonia branch o QuzhouChemical Plant, Wujing Chemical Plant and GuangzhouN Fertilizer Plant were built. Later, the Kaieng ChemicalFertilizer Plant in Henan Province, People’s LiberationArmy Chemical Fertilizer Plant in Yunnan Province, theShijiazhuang Chemical Fertilizer Plant, Huainan Chemical

Fertilizer Plant in Anhui Province and Jianjiang ChemicalFertilizer Plant in Guizhou Province were built.

During the mid-1960s, the Luzhou Natural Gas ChemicalPlant and the Xingping Chemical Fertilizer Plant were set upwith imported technology rom Britain and Italy, the ormerusing natural gas as raw material with urea as the processedproduct o ammonia while the latter’s raw material washeavy oil with ammonium nitrate as the ammonia processedproduct. Afer more than 10 years o development, a total o

55 medium N ertilizer enterprises in the traditional sensewere set up. O these, 37 produced urea. Te rest producedammonium nitrate and ABC. Among these 55 medium Nertilizer enterprises, 33 used coal as raw material; nine usedheavy oil and 13 used gas (including natural gas, oil eldgas and coke-oven gas). Tese medium-sized N ertilizerenterprises are mainly divided into two types. One typewas ABC plants with capacity o ammonia productionequivalent to 45,000 t o NH

3/year. Examples o this typeinclude the Jiangxi Ammonia Plant, Baoji N Fertilizer Plantand Xuanhua Chemical Fertilizer Plant. Te other type wasurea production plants with capacity equivalent to 60,000 t oNH

3/year. Shijiazhuang Chemical Fertilizer Plant, Yinchuan

Chemical Fertilizer Plant and Lunan Chemical ertilizer Plantl



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g

respectively. otal urea prowas 41.5 Mt (product quansmall enterprises o N ertili20.9 Mt and their shares in whole country were 31.5%,

During the 1960s, the rDebang took the lead in deproduction o synthetic Chemical Fertilizer Plant wIt provided the experiencin achieving industrial pr

development, the technolothe small N ertilizer indubegan building their small small N ertilizers plants wHowever, economic returnwhich suffered severe lossand redevelopment, some some closed down. Since N ertilizer enterprises ca

with regard to compositiototal o 143 projects in 126urea production and this cN ertilizer enterprises propresent, among the small Nare still producing urea.

Te development o smalollowing eatures.

1. Capacity o installationsthe number o enterprises isManagement o small N o drawbacks such as lowproduction and relativelyopportunity arises, they seChanging rom ABC to thopportunity or the enterpro 30,000 t synthetic ammo60,000 t o synthetic ammoriginally small N ertilizer Industry in Shandong ProviFengxi in Shanxi Province, Yand Hengsheng in Shandoni t bi t i ith th

capacity and expanded production to 160,000 t/y and carriedout overall renewal o the existing production process. Tecompany is getting ready to build another new productionacility with a capacity o 180,000-300,000 t o total ammoniaper year. Shijiazhuang Chemical Fertilizer Group Ltd. signedan agreement with Jincheng Coal Industry Group in August2004 to establish Shijiazhuang Jinshi Chemical Fertilizer Ltd.with registered capital o RMB160 M. Jincheng Coal IndustryGroup held 56.3% o the shares. Tis provided strong supportto the development o the Shijiazhuang Chemical FertilizerPlant.

Participation by private enterprises also expedited thedevelopment o Chinese medium enterprises o N ertilizers.Ulashan Chemical Fertilizer Ltd. o Inner Mongolia was rstbuilt in 1970. In September 2001, the company turned roma state company to a privately operated joint stock company.Currently, the company has six subsidiaries. Syntheticammonia capacities was raised rom 80,000 t to the present300,000 t, while urea capacities expanded rom 60,000 t to260,000 t. Te ammonium nitrate capacities expanded rom

110,000 to 280,000 t. Panjin Zhongrun Chemical IndustryLtd. is a big private enterprise ormed afer the acquisition oPanjin Chemical Industry Ltd. by Panjin Zhongrun IndustriesGroup Ltd. o Liaoning Province. Since the existing supply onatural gas cannot be guaranteed, the enterprise is currentlyplanning to reorm its raw material or synthetic ammoniaby replacing natural gas with local coal. Medium N ertilizerplants like Qian’an Chemical Fertilizer Plant and HubeiJinyuan Chemical Industry Ltd. (ormer Exi Chemical Plant)

were also converted to private operation.According to the statistics o the Nitrogen Fertilizer

Industry Association, in 2005, medium N ertilizer enterprisesproduced 7.3 Mt o synthetic ammonia, which contributed15.8% o the total production and a year-on-year increase o8.2%. Urea production was 7.4 Mt, which equated to 17.9%o the total production. Apart rom urea, they also producebases or ammonium nitrate, concentrated nitric acid, sodiumnitrate, sodium nitrite and methanol.

2.2.1.3 Small N ertilizer plants – China’s originalcreationSmall N ertilizer plants in China adopt carbonisation orammonia synthesis in the production o ABC, a technologyd l d b th Chi th l Af d d



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technical progress made by tast. For example, the “enesuffi ciency in steam or the pris the method that uses symeasures capable o reduc various sources and distributhe Shouguang Chemical Ferconsidered the strength o eto achieve in getting rid o atwo types o coal into one. Ino two streams o water in c

small ertilizer enterprises thexpenses o waste disposal. throughout the country by tFertilizer Industry Associatsupport rom the State. It ismodications which must bepossible the continuous dro values. At present, a handulhave achieved the objectiv

than 1,000 kg per tonne oconsumption lower than 1,consumption lower than 10M

2.2.1.4 Experiences in theenterprises and lessons leAfer decades o hard woertilizer industry in China hProduction o N ertilizers

needs with a small surplus the rapid development o Chdevelopment o large N ertilion imported technologies. Cthat use different raw materithe technological advancemo China and minimized thin the world. With the limiteuse o oreign unds contributhe importation o large ertithe domestic development management expertise o the improvement o domestto the requirements o im

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2. Te innovative system o organization has promoted thedevelopment o small N ertilizer enterprisesTe depth o reorm impelled the small enterprises toimplement innovative system o organization. Great changeshave taken place with respect to the system o management,orm o organization, respect or property rights andmechanism o business operation. For example, the LingguChemical Industry Ltd. in Jiangsu Province carried out assetreorganization in the bankrupt Jiangyan Chemical FertilizerPlant, acquired its asset control rights and enabled its annualproduction o urea to reach 130,000 t, with yearly prot and

tax amounting to RMB10 M. With its successul expansionat low cost, Linggu Chemical Industry urther implementedreorm in the share system where staff and workers hold 55%o the total stock. Company property rights are transparent.Tis mobilized the zeal o the staff and workers. From March2001 to April 2002 technological reorm or the productiono 120,000 t o synthetic ammonia and 200,000 t o urea wasaccomplished in merely 13 months. By 2002, productioncapacity o urea reached 450,000 t.

Te Fengxi Fertilizer Industry Group set up in 1998 in theprovince o Shanxi joined hands with several small chemicalertilizer enterprises in Shanxi Province and, taking the LinqiMain Chemical Plant as its oundation, set up a “united eet”o small ertilizer enterprises. Tis is yet another model odevelopment among small N ertilizer enterprises. With thegrowth in strength o enterprises, they continued to open upnew opportunities or development. In July 2003, the FengxiGroup and Jincheng Anthracite Mining Group Ltd. made

joint investment to set up Shanxi Jineng Coal Chemistry andechnology Co., Ltd. Upon ormation o the new company,plants were built at Gaoping and Wenxi in Shanxi Provinceor annual production o 300,000 t o synthetic ammonia,combined production o 520,000 t o urea and 60,000 to methanol; 160,000 t o synthetic ammonia, combinedproduction o 300,000 t o urea and 40,000 t o methanolrespectively. Te Wenxi project started production in 2005and the Gaoping project started in the rst hal o 2006.

A large number o small N ertilizer enterprises, with theexception o big groups and joint-stock enterprises, adoptedthe stock co-operation system. With support rom localgovernment, state assets in some enterprises were withdrawnaccording to law to establish new private operations. TeAlli G D i R i i Qil Yih d Y h



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gas. Finally, large volumes opollution to the surroundinhave already taken measu

problems o long transpoculms and coal dust, and tmanuacturing clean coal synthetic ammonia are the mmedium-sized N ertilizer e

Tere are also lessons enterprises that use natural Zhijiang Plant o Hubei P

Hunan along the Changjiannatural gas rom Sichuan (sas raw material. Due to thegas reserves, gas could notthe plants had no choice bupresent rapid rise in oil prhuge sums o money to swita good lesson. In the latterN ertilizer enterprises tha

were under pressure becauresiduum and its exorbitantthe idea o switching rom oto build several large syntheas raw material. When thein getting raw materials, anand the plants’ had to shut dto carry out reorm in raw mgas and others, de-oiled asp

2.2.2 Examples of typi

Afer decades o developmeannexation and stock own580 N ertilizer plants in examples and the ollowing

2.2.2.1 ypical examplesenterprises with trans-reChemical ertilizer and syno the Liaoning Huajin Chis a typical example o a lawith trans-regional operat

d ti b t Li i

o small and medium enterprises are “locally born andbred.” Supported by the State’s policy o preerence, smalland medium enterprises o N ertilizer continue to grow

in strength, making an important contribution to China’sagriculture. Te term “ Xiao Dan Fei” (“small N ertilizer”) is alegacy rom the period o planned economy. In reality, manyoutstanding small N ertilizer enterprises have overtaken themedium enterprises or even the large enterprises. Accordingto the statistics o the China Nitrogen Fertilizer IndustryAssociation, among the 500 small o N ertilizer enterprises,there are seven whose annual urea production hits 500,000

t, 14 o them produce 300,000-500,000 t, and eight with200,000-300,000 t. Small N ertilizer enterprises producemore than hal o the urea output in the country.

Te rapid growth o these small N ertilizer enterprisesis due to their own continuous development, expansiono production, sustained technical updating, expansiono product types and creation o more and better ways omarketing, not to mention the support given by the associationo the trade and State policies. Tere is yet another actor that

drives the development o small N ertilizer enterprises – theimportance the State attaches to agricultural developmentand the armers’ demand or ertilizer. Even though thedevelopment o small N ertilizer enterprises has been veryrapid, the overall level is still not high. Apart rom advanced“star” enterprises, an appreciable number o them are indiffi cult positions due to various reasons. oday, when themarket economy plays the main role, support and preerentialpolicies o the State gradually weaken and the leading role

played by the market will gain strength, the number o smallenterprises will be reduced urther. Tose small N ertilizerenterprises that are perorming well will be on equal ootingwith the large and medium-sized enterprises or may evenovertake them. Te remaining small enterprises will have tond a way out.

Changes in the raw materials policy is worth mentioning.Te production o synthetic ammonia by N ertilizerenterprises in China started by using coke, coke-oven gasand lignite. As the use o boiling oven gasication o ligniteseverely pollutes the environment and water, every effort wasput in to developing coke as raw material. Coke was a limitedresource at that time and anthracite was used to replace it.Tis made possible the widespread development o small

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2.2.2.2 ypical examples oplantsTe Hualu-Hengsheng Gro

typical case o a small domthat has successully turnedenterprise. It was ormerly kFertilizer Plant, built in Apr5,000 t o synthetic ammoaccumulated losses o RMB verge o bankruptcy. Trougovernment and the enterpr

or synthetic ammonia was rthe production capacity or 240,00 t making it a mediuthe enterprise invested moreswitch to the production o the rst small N ertilizer eo urea brought a new oppothe company. Te group invexpand the production o sy

the second urea production control system (DCS) rom Rintroduced and with this, tautomation in its operationand annual prot and taxes M. In February 1996, the comHengsheng Chemical Industr1998, the Shandong provincito transer the entire compan

Ltd. which was renamed thGroup Co., Ltd. Hualu-Hits C

1 chemical product ch

ormaldehyde, organic aminenabled the company to wide

In the 21st century, the entered a new developmentainnovation. In September 20B to adopt the opposed-typgasication technology in property rights. Te installatiSingle series and with coal as rcould produce 300,000 t o December 2004, all processes

d it t th

Te path o development ollowed by Liaoning HuajinChemical Industry Group was a new route opened up whenN ertilizer enterprises using natural gas as raw material are

aced with shortage o resources. It is a typical case o an Nertilizer enterprise integrating the advantages in resources,production, business operation, management and technologyto become a strong group. Tis also complies with the presenttrend o chemical ertilizer production plants concentratingin areas o raw material production.

Te Huajin Group Company’s ability to achieve theintegration o resources and technology and its strategic

enterprise development has a lot to do with its own innovation.At present, Liaoning Huajin Chemical Industry Group hasthree state level research centres on chemical ertilizers,synthetic resin and precision chemical engineering. Teseorm the coordination and organization o scientic research,production and market services and a closely coordinatedoperational mechanism. With natural gas production atthe Liaohe Oil Field gradually decreasing and the HuajinGroup lacking adequate gas supply, the company chose the

American KBR heat exchange type conversion technology torevamp its synthetic ammonia installation. Afer the revamp,the ull load synthetic ammonia comprehensive energyconsumption was 37.9GJ/t and the single consumptiono natural gas per tonne o ammonia was 765m3. Afer therevamp, the manuacturing cost o synthetic ammonia andurea was reduced by more than RMB200/t compared withthe cost beore the revamp, comparable with the advancedstandard in the country. In recent years, the Huajin Group

has carried out more than 50 items o technical reorm on theimported plants, enabling them to increase their productioncapacity by 10%. While working on reorm in the energysaving technology, the Huajin Group also put in effort toadd value to its products and market competitiveness. Bycooperating with domestic scientic research organizations,it has developed new products such as urea-based compoundertilizer, long-acting compound ertilizer, special compoundertilizer or rice plants and slow release urea and other newchemical products. Te production and sale o its slow releaseurea has reached more than ten thousand tonnes, a leaderamong N ertilizer enterprises in China.

Faced with ever-increasing market competition, theHuajin Group will continue to innovate along the road

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ago. It reached RMB6.3 mechanism was one o trom the Head Offi ce an

state-owned, all subsidiamechanism o private op

2. It makes ull use o taenterprise. One o the barapid development o theimportance it has attacheway o looking at talent the development o Yihu

the principle adopted as o talent. “Paper qualican important eature o Y

3. Innovate ways o managemmany new ideas that rmodels. For example, tho “ve unications” (in manpower and procure(with regard to “sec

expenditures, and analymethod and internal co “ve unications andmany diffi culties encouthe rapid development comparison greatly reducreated the atmosphere oenterprise. More importo procurement and o

o competitive biddinoperation” in the operaare guaranteed. As the pcontinues to improve company was permittedSecurities Regulatory Cound raising rom the stobenets o the enterpriwilling to provide undabundant sources o uconditions or developm

2.2.3 Comparison betwenterprises with those

2.2.2.3 ypical example o a small N ertilizerenterprise that developed rapidly Te predecessor o the Hubei Yihua Group Co., Ltd. was

“Yichang Regional Chemical Plant,” a small N ertilizerenterprise established in 1977 at Huting ownship, ZhijiangCounty in the province o Hubei. Its synthetic ammoniacapacity was originally designed at 10,000 t/y. Its productiongrew to 35,000 t/y at the end o the 1980s. ABC was the onlyprocessed product o ammonia. Carbonisation briquettewas the raw material used or the production o syntheticammonia. Development o the company was not at all

smooth. It was included in the list or shut down and transera number o times. In the 1990s, the company continued tocarry out revamps and expansion. Production capacity o asingle stream unit was 80,000 t o synthetic ammonia/year.Production capacity or a single-stream o urea installationwas expanded rom 40,000 to 110,000 t/y. In August 1996,Hubei Yihua “A” Share was successully listed on the ShenzhenStock Exchange. Trough merger, trusteeship and Chinese-oreign cooperation, the group has become a large enterprise

group with more than 10 subsidiaries, a listed company andthree Chinese-oreign joint venture companies that coverthree major business domains in chemical ertilizer, chemicalengineering and thermal power. In 2003, the Yihua Groupproduced 680,000 t o synthetic ammonia, 840,000 t o urea,28,000 t o pentaerythritol and 280,000 t o ammoniumphosphate. Sales revenue or the whole year amounted toRMB2.05 B. Prot and taxes amounted to RMB 0.2 B, 2.5times that o 2000. In 2003, another plant was built to produce

200,000 t o NPK compound ertilizer. At the end o 2004,through participation in the reorm system o state enterpriseo Xingyi Main Chemical Plant in Guizhou Province, HubeiYihua acquired the plant and ormed Guizhou Xinghua Co.,Ltd. and Guizhou Yihua successively. With an investment oRMB500 M, work was started at Xingyi in February 2005 orGuizhou Yihua to produce 200,000 t o synthetic ammoniaand 300,000 t o urea. Afer more than a year o construction,work was completed in June 2006 and the plant went intoproduction. At present, Yihua has an annual productioncapacity o 1.2 Mt o synthetic ammonia and 1.8 Mt o urea.Te “YIHUA” brand urea, the leading product in the ertilizertrade in Hubei province is exempted rom inspection by theState. Yihua is also a large producer o MAP in China as it is

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N ertilizer plants in advancethe economic scale o large p

2.2.3.2 N ertilizer enterpmany people and productUnder circumstances o simiemployed by Chinese N times more than that o entFor example, or a plant oand 520,000 t urea, the numcountries averages 400. In Ch

needs around 2,000 peoplemployees is more noticeablenterprises than in the big onin the administrative system,employees has improved slighyears. More employees meancompetitiveness is certain to

2.2.3.3 Tere is a gap in th

equipmentOther than or the large, imthose that have undergone rand have reached internatimedium-sized enterprises inwith respect to technical equ

About two-thirds o synChina uses coal coke as rawo N ertilizer enterprises th

were built during the 1960s Five-Year Plan” technologiproductivity and product varo the small and medium-sizABC to urea, with loans roand the World Bank, allowenterprises to be raised signstill exists when comparedstandards. For example, an ior not the production technadvanced is the energy consuWorldwide, synthetic ammoraw material make up more tenergy saving processes, the

th ti i i 7M C

up to December 2005, there were 571 N ertilizer enterprisesthroughout the country. In 2005, synthetic ammoniaproduction in the whole country was almost 46 Mt, meaning

that the average production o synthetic ammonia or eachenterprise was only 80,000 t, which is about a quarter o anordinary enterprise in advanced countries. In 2000, manyenterprises went through mergers, association, adjustment,changes in the system o operation and expansion. Te rstsingle series plant with daily production o 600 t syntheticammonia was set up by an American petroleum companyin 1963. In the late 1960s, single series installations withdaily production o 1,000-1,500 t o synthetic ammonia werebrought on stream. By the end o the 1990s, the US had morethan 50 N ertilizer plants with an average production capacityo 320,000 t/y. In 1998, the average production capacity ourea in the US was 8.5 Mt. O these, the capacity o just 25 othem totalled 7.5 Mt/y, 85% o the total US capacity.

Afer decades o development, through acquisition,annexation and reorganization, big enterprises in the worldstood out and their scale o production continued to go up. Te

biggest N ertilizer production company is Yara International(Norway) with an annual production capacity o 16 Mt oN ertilizers (including ammonia, urea, and ammoniumnitrate). Yara International was ormerly the ChemicalFertilizer Department o Norsk Hydro o Norway. Beginningin 1979, Norsk Hydro carried out a series o big acquisitionsand annexations, and currently its presence is worldwide. Inthe 1980s, countries where acquisition or equity participationtook place included the Netherlands, Sweden, Britain and

France. Later in the 1990s, the company held shares, not just in Western Europe, but also in some chemical ertilizerproduction enterprises in Eastern European, Russia, the US,Tailand, Vietnam, Malaysia, Brazil, Morocco and rinidad.Annual N ertilizer production o Yara International in 2005was close to 13 Mt and production o synthetic ammoniawas 5.3 Mt. o expand production capacity o N ertilizers,Yara International and Qatar Petroleum signed, in February2005, an agreement to build a new plant in Qatar with annualproduction o 1Mt ammonia and 1.1 Mt urea. Apart romYara Internatio

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