Yuntianhua and Zangge Mining to Acquire 92% Stake in Congo Potash Mine for $171M

September 18 — Yuntu Holdings (002539) announced that its wholly-owned subsidiary, Yingcheng Chemical Company, plans to establish a joint venture in Singapore with Zangge International, a wholly-owned grandchild company of Zangge Mining. The joint venture intends to acquire a 92% equity stake in Kanga Potash Company ("KP Company") in the Republic of Congo for USD 171 million (approximately RMB 1.157 billion).

Yingcheng Chemical's investment, corresponding to its 25% shareholding, amounts to USD 42.7616 million (approximately RMB 289 million).

The collaboration between these two leading A-share fertilizer companies extends their industrial reach into the heartland of African potash resources. Against the backdrop of China's heavy reliance on imports for domestic potash fertilizers, this investment has attracted significant attention.

KP Company's Core Assets

According to the announcement, KP Company's core assets consist of:

• Mining rights for the Kanga potash mine
• Exploration rights for the Loango potash mine

Both assets are located within the Republic of Congo. The Kanga mining area covers 321 square kilometers, with validity extending until 2047. Resource estimation reports indicate that combined controlled and inferred resources under the Kanga mining license total 1.989 billion tonnes of potassium chloride, with an average grade of 16.73%.

Strategic Rationale

Following the completion of the transaction, KP Company's original shareholders will retain an 8% equity stake.

Yuntu Holdings stated that this investment represents an important strategic move to extend from its core compound fertilizer business upstream into the potash raw material sector. By taking a stake in KP Company, the firm aims to:

• Increase its potash resource reserves
• Address shortcomings in its upstream layout
• Leverage its partner's mature experience in overseas project operations to mitigate cross-border investment risks

Zangge Mining, one of China's leading domestic potash producers, reported that in the first half of 2026, its potassium chloride business generated operating revenue of RMB 1.472 billion, with a gross margin reaching 65.19%. Leading this overseas potash project as the controlling shareholder aligns with its dual-wheel strategy driven by potash and lithium.

China's Potash Market Context

China is the world's largest consumer of potash fertilizers, with annual demand ranging from 17 to 18 million tonnes. However, domestic potash resources are severely insufficient, with over 95% concentrated in the Qaidam Basin in Qinghai Province and the Lop Nur region in Xinjiang.

According to data from Baichuan Yingfu and Customs:

• Domestic potassium chloride production in 2025 was approximately 5.82 million tonnes, a year-on-year decrease of 6%
• Imports reached 12.615 million tonnes, remaining largely flat year-on-year
• Import dependency ratio: approximately 71%

Entering 2026, import momentum has strengthened further:

• Cumulative imports in the first half reached 8.8033 million tonnes, a substantial year-on-year increase of 40.18%
• Full-year imports are expected to hit another historical high

Domestic potash production capacity is highly concentrated in Qinghai Province, where Salt Lake Industry and Zangge Mining are the two provincial leaders, dominating the domestic supply landscape through resource advantages such as the Qarhan Salt Lake.

Listed Company Performance

Yuntu Holdings (First Half 2026)

| Metric | Value | Change | |--------|-------|--------| | Operating revenue | RMB 11.715 billion | +2.76% YoY | | Net profit attributable to parent | RMB 708 million | +38.61% YoY |

The company's 700,000-tonne synthetic ammonia project is operating stably, while its yellow phosphorus and iron phosphate businesses have experienced explosive growth, continuously strengthening its integrated industrial chain moat.

Zangge Mining (First Half 2026)

| Metric | Value | Change | |--------|-------|--------| | Operating revenue | RMB 2.065 billion | +23.05% YoY | | Average price of potassium chloride | — | +7.40% YoY | | Revenue from lithium carbonate business | — | +118.22% YoY |

Note: Revenue figures exclude contributions from investment income at Julong Copper.

The company's planning documents indicate a target potash production volume of 1.15 to 1.25 million tonnes by 2028.

Market Outlook

CITIC Securities remains optimistic in its second-half 2026 strategy regarding potash, citing robust demand and suggesting prices may trend upward. However, in the short term:

• High inventory levels
• Surging imports
• Seasonal demand pullbacks

...form offsetting factors, limiting upside potential for prices.

As winter stockpiling begins in the fourth quarter and overseas capacities from companies like Asia Pacific Potash Corp continue to return sales to the domestic market, the rebalancing of market supply and demand will become a key variable influencing prices.

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