China XLX Fertiliser subsidiary Henan Xinlianxin Fertiliser has signed a gas supply framework agreement with Air Products and Chemicals (China) Investment to supply oxygen, hydrogen, nitrogen and other industrial gases for its fourth urea plant.
The deal is expected to enhance the plant's operating efficiency as well as lower production costs.
Air Products and Chemicals (China) Investment will invest approximately 500m yuan ($78.8m) to set up a wholly-owned subsidiary at the site of the fourth urea plant to supply industrial gases for a term of 20 years, which will reduce the plant's expenses by 14%.
China XLX Fertiliser chairman and CEO Liu Xingxu said 70% of urea production in the market was halted due to the unstable supply of the gases.
''Our strategic cooperation with Air Products and Chemicals (China) Investment allows us to get access to the stable supply of industrial gases at lower costs and to meet the high performance requirements of the air separation unit at the fourth urea plant, whereby ensuring its stable operation and boosting its productivity,'' Xingxu added.
The urea plant will increase the group's production capacity from 1.25 million tons a year to more than 2 million tons a year.
Construction of the urea plant has already started and is slated for completion in the second half of 2013.
