(Yicai Global) Feb. 18 -- Chinese chemical maker Hongda Xingye Group's stock went through the roof today after it announced its units had agreed to spend USD21.8 million to buy a set of electrolysis hydrogen production lines with an annual capacity of 300,000 tons and corresponding technologies from Tokyo-based global industrial chloralkali giant Asahi Kasei.

Hongda shares [SHE:002002] climbed throughout the morning to top out at 10.04 percent at 11.30 a.m. and stop trading under the daily rise limit bourse rule impose at CNY5.04 (USD0.72) upon its announcement of the deal yesterday.

The Guangzhou-based company's two wholly-owned subsidiaries Inner Mongolia Zhonggu Industry Mining and Jiangsu Golden Material jointly penned contracts covering the asset transactions and technological cooperation with Asahi Kasei the same day, agreeing to collaborate with it on the production, storage, transport and industrial application of hydrogen power, according to the statement from the Chinese parent that has been actively developing automobile hydrogen power supply technology.

Hongda will purchase the electrolyzation production lines, which apply ion exchange membrane technology and will have yearly production capacity of 300,000 tons, to turn out hydrogen, sodium hydroxide and other chemicals using sodium chloride solutions as raw materials. The asset transaction also includes grant of licenses to corresponding patents and proprietary know-how, technical documents and services, as well as personnel training, in addition to the manufacturing equipment.

The statement was silent as to whether Hongda is acquiring an existing plant or putting up its own, or if so where the production facilities will be built or their planned construction schedules, though it may be inferred that China will be the scene of its manufacturing activities in either event, since the firm has been busy building hydrogen filling stations in China's northern Inner Mongolia Autonomous Region where its local affiliate Inner Mongolia Zhonggu Industry Mining, one of the signees of yesterday's deal, is building a large-scale chloralkali production plant in Erdos, Inner Mongolia with a production capacity of 600,000 tons of polyvinyl chloride.

Hongda announced last week it was teaming with Asahi Kasei in hydrogen production using chloralkali-related technologies over the next three years and also declared its intended purchase of the Japanese firm's world-class hydrogen-production technologies. It did not provide any details of the collaboration at that time, however. 

The market may hope it proves more forthcoming in the near future.

Editor: Ben Armour