OREANDA-NEWS. October 06, 2014. China BlueChemical, which has recently booked 376 million yuan (HKD474 million) of impairment losses on a soured coal-mining joint venture, has agreed to lease three production facilities worth 630.47 million yuan to a sister firm to expand financing channels and cut funding cost.

The fertiliser manufacturing unit of China National Offshore Oil Corp, the parent of listed CNOOC, will lease the phosphoric acid and sulphuric acid production facilities and the common utilities of one of its phosphorus fertiliser plants to CNOOC Leasing, a wholly owned unit of CNOOC’s parent.

“The entering into of the finance lease agreement will expand the financing channels of the [phosphorous fertiliser plant] and lower its financing cost,” BlueChemical said in a filing to the Hong Kong stock exchange.

The lease period is one year and 88 days, and the lease interest is USD1.97 million, to be paid in five instalments.

CNOOC Leasing will receive a commission fee of USD 2.05 million.

BlueChemical booked for the first half of this year a 376 million yuan impairment loss on a 49 per cent stake it took in a private mining firm in Shanxi in 2009 for 637 million yuan.

The firm’s coal mine was unable to resume production after work was suspended in 2010 amid a dispute between its partner Shanxi Hualu Thermoelectricity and the contractor. The assets of the venture are scheduled to be auctioned at Shanxi Property Rights Exchange.

BlueChemical had a low debt gearing ratio of 5.34 per cent and 3.03 billion yuan of cash at the end of June, its interim report showed.