Hebang’s convertible bond issue up to RMB4.6 billion approved, to be spent on an annual 500,000-ton PMIDA project

Date:07-03-2023

On June 21, Hebang announced that the Shanghai Stock Exchange examined and approved Sichuan Hebang’s issue of convertible corporate bond to unspecified investors.

The offering of convertible bond up to RMB4.6 billion is intended for use in an annual 500,000-ton PMIDA project

On June 13, Hebang issued an offering memorandum for the convertible corporate bond to unspecified investors, with a total amount up to RMB4.6 billion (inclusive of RMB4.6 billion). The fundraising is for use in the annual 500,000-ton PMIDA project undertaken by Guang’an Bimeida Biotech, which is Hebang’s wholly-owned subsidiary.

Hebang’s annual 500,000-ton PMIDA project is a key project facilitated by the government of Sichuan Province. As a PMIDA industry leader in China, Hebang is still able to expand its capacity, as backed up by its own phosphate resource in Mabian Yanfeng and Hanyuan Liujiashan phosphate mines, totaling to 90.91 million tons of phosphate ore resource, thus making up the company’s cost advantage to some degree. After more than a year of project progressing, the feasibility study, environmental impact assessment, energy assessment and work safety assessment have come to an end, being now ready for designing and equipment procurement. On May 29, the project implementation company, Guang’an Bimeida Biotech, executed the design contract for the annual 500,000-ton PMIDA project with China Chengda Engineering Co., Ltd.

New capacity to reach 320,000 tons, leading to global capacity of 1.5 million tons

Glyphosate is the world’s largest pesticide variety, as well as China’s largest pesticide variety in both output and export. The importance of glyphosate in the pesticide industry is self-evident, due to which, any business actions such as the change in pricing and production capacity would attract close attentions from the Chinese and international agrochemical industry players. However, it is noted that, resulting from factors like the periodic inventory increase, the weak price resilience, the lack of market confidence from downstream players and the international buyer’s hesitation in buying, in the short run the price of glyphosate began to fall sharply since end of December of 2021; in the medium and long run, the environmental compliance pressure, supply and demand situation may impose further restriction on the production of the product.

According to open information, the current production capacity of glyphosate still stays at a high level. It is reported that the present glyphosate capacity of prime manufacturers, including Xingfa Group, Jiangshan Co., Ltd and Yangnong Chemical, is still on the high side. In the second half of 2022, the 70,000-ton glyphosate technical new capacity of Inner Mongolia Xingfa Science and Technology will be brought on stream, which may have an impact on the product price to a certain extent.

Data reveal that the current global annual demand for glyphosate is about 710,000 tons while the global glyphosate production capacity of 2022 reached 1.18 million tons, of which the Chinese production capacity was 810,000 tons and the overseas production capacity was 370,000 tons. In this context, Hebang’s 500,000-ton PMIDA capacity equals to an annual 320,000 tons of glyphosate, as converted according to calculation. After the project is put into production, the total global capacity is going to reach 1.5 million tons.