China to invest $13 billion in coal-based chemicals base

10 Mar 2007

Mumbai: China is investing $13 billion to build a liquefied-coal chemicals project in northwest Ningxia Hui Autonomous Region.

Expected to be Asia's largest facility of its kind, the project would produce methanol and other chemicals from coal to meet China's growing demand for energy alternatives.

Director of the regional development and reform commission Hao Linhai said that the project is coming up in the Ningdong chemical resource base, which is located near Ningxia's coal reserves, which has 80 per cent of the region's coal deposits.

The chemical plant will convert over 5 million tonnes of coal annually into chemicals such as dimethyl ether, olefin and methanol, which are fuel additives.

Several plants that will turn coal into diesel fuel are now under construction and will go into production in 2020. Hao informed that these are expected to convert 50 million tonnes of coal into 10 million tonnes of diesel every year.

China, meanwhile, is negotiating with South Africa-based Sasol and Royal Dutch Shell Group to introduce coal liquefaction technologies needed to produce diesel fuel. China is the world's top coal producer and consumer. It uses 42 per cent of the world's thermal coal for power and 48 per cent of its coking coal for steel. Energy consumption per unit of gross domestic product fell for the first time last year, by 1.2 per cent, but this was still well short of the 4 per cent target.

China is also the world's second biggest emitter of greenhouse gases. The International Energy Agency expects it to overtake the US by the end of the decade.