Shenhua mulls investment in coal-to-chemical project

25-Sep-06

The Shenhua Group plans to invest more than RMB 40 bln in three coal to chemical projects, as part of the government's efforts to reduce China's reliance on crude oil as an energy source and chemical feedstock. Currently, China imports 40% of its crude oil and 35-60% of its basic chemicals, while coal requirements are mainly derived from the Mainland. Construction of two of the projects is scheduled to be complete within the next four years. Construction of the third project in Inner Mongolia, at an investment of RMB 13 billion, is not expected to take more than 48 months and awaits approval by the National Development and Reform Commission (NDRC). The project in Inner Mongolia will build a plant that uses coal to produce 1.8 million tons of methanol, 300,000 tons of ethylene and 300,000 tons of propylene. Shenhua will also conduct a feasibility study with U.S.-based Dow Chemical to build a plant in Yulin, Shaanxi province, to explore the possibility of producing 3 million tons of methanol and one million tons of ethylene and propylene, as well as PVC.