China Coal Energy plans $3bn Shaanxi engg plastics project

(adds paragraphs 6 – 11)

SINGAPORE (ICIS)–China Coal Energy is planning to invest yuan (CNY) 19.3bn ($3.1bn) to construct a 600,000 tonne/year engineering plastics project at Yulin in Shaanxi province, the company said on Tuesday.

The project will be based on coal, which will be first converted to methanol, and then to plastics, the company said in a statement.

Output from the project is intended to cater to the east China markets, China Coal said.

No definite timetable was provided on when construction will start, but the company estimated that the project will take four years to complete.

China Coal Energy is undertaking the project to extend its product chain downstream in view of China’s weakening demand for thermal coal since last year amid a slowing economy, the company said.

The company is the second-biggest coal producer in China.

In Inner Mongolia, China Coal Energy is partnering with Yuanxing Energy in building a 500,000 tonne/year engineering plastics project at Ordos.

The Ordos project will use methanol as feedstock to produce olefins, and then polyethylene (PE) and polypropylene (PP). Part of the methanol will be produced from coal, the company had said.

China is currently operating three coal-based plastics projects – two of which are owned by China Shenhua, the country’s biggest coal producer, and one is operated by Datang Group.

Shenhua’s operations in Inner Mongolia can produce 300,000 tonne/year of PE and 300,000 tonne/year of PP. The company’s site at Ningxia, on the other hand, can produce 500,000 tonne/year of PP.

Datang Group, which is one of the biggest power generators in China, is running a 460,000 tonne/year coal-based PP project at Inner Mongolia.

($1 = CNY6.15)

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections