Shenhua and Dow to invest $10bn in Yulin chemicals complex

06 November 2009 09:12  [Source: ICIS news]

SHANGHAI (ICIS news)--China’s largest coal producer, Shenhua Group, and US-based Dow Chemical plan to invest $10bn (€6.7bn) to build a large coal-chemical complex at Yulin, northwestern Shaanxi province, that could be operational by 2016, a local government official said on Friday.

The complex could produce around 3.5m tonnes/year of fine chemicals and plastic products, the official said.

"The whole complex is scheduled to come on stream by 2016," the official said. However, the source did not give a specific date for the start of construction.

"The project [has finally entered] a substantive phase after talks for around 10 years. The feasibility study report is near the end and will be finished by the end of this year," the official told ICIS news. The government was likely to grant approval for the project, the source added.

The complex, which would be located in the Qing Shui Gou area of the Yu Shen Industrial Zone, would have 23 production units, auxiliary projects, supporting facilities and storage devices, the official added.

The key chemicals plants include a 3.32m tonne/year methanol plant, a 1.22m tonne/year methanol-to-olefins unit and a 400,000 tonne/year monoethylene glycol (MEG) plant, according to a local government release.

A 210,000 tonne/year ethanolamines (EOA)/ethylenediamines facility, a 340,000 tonne/year polyether polyols unit and a 150,000 tonne/year acrylic acid facility would also be constructed at the site, the document said.

The complex would also include a 200,000 tonne/year acrylic ester plant, a 200,000 tonne/year chlorinated methanes (CMS) unit, a 510,000 tonne/year ethylene dichloride (EDC)/vinyl chloride monomer (VCM) plant and a 500,000 tonne/year polyvinyl chloride (PVC) plant, according to the document.

The two parties had commenced the project approval process for the complex, Dow said on 3 November.

"Dow is well on its way to transform into an earnings growth company and this project supports our strategy to invest in growth geographies like China," Andrew Liveris, chairman and CEO of Dow, said.

Zhang Xiwu, chairman of Shenhua Group, said: “With rich energy and mineral resources and good infrastructure for coal, natural gas, oil and salt, Yulin is an important energy and chemicals base for China with huge growth potentials.”

Coal, which is abundant in the region, would be used as the feedstock. Coal would be converted into ethylene and propylene and later into downstream chemical products for use in consumer products

Shenhua and Dow would likely form a 50:50 joint-venture company to build and operate the large complex, the source added.

($1 = €0.67)

Dolly Wu contributed to this article.

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