Coal-to-Chemical Plant To Be Built in Xingtai, Hebei

Xingtai Municipal Government (Heibei Province) raised the notion that the development of coal-to-chemical industry in the city shall be sped up so that in the next a few years, Xingtai will become the province's, even China's, key coal-to-chemical industrial base.

With balanced development between power and coal-to-chemical in mind, the focus in the next development stage will be further processing of coal tar; further processing of benzene; methanol and olefins. Two coal-to-chemical production centers in the city will be located in Xuyang Coal Chemical Industrial Park and Jinneng – Jiantao Coal Chemical Base. One coal-to-chemical research and development center will also be built.

The development scheme shows that by 2010, the city's capacity to transfer coal is pegged at 14 million tons per annum, and city-wide coal-to-chemical annual sales will reach $5 billion. The annual production capacity of coke will reach 8 million tons and that of finely hydrogenated benzene will reach 250,000 tons. The annual output of other chemicals will be: cyclohexanone 200,000 tons, methane 2.2 million tons, olefins 500,000 tons and carbon black 300,000 tons. The city will also have the ability to further process one million tons of coal tar. Based on the coal tar produced, carbon black production equipment is imported from Cabot Corporation (NYSE: CBT) (Boston, Massachusetts) to make industrial rubber and high-quality ink colorant.

To facilitate construction of the coal-to-chemical base, the Xingtai Municipal Government has formulated favourable policies towards large coal-to-chemical enterprises, including no and low interest loans to long-term large coal-to-chemical projects, and adjustment of coal supply policy to ensure the coal supply to the city's key coal-to-chemical projects.

The total investment into Xingtai's Coal Chemical Base is around $1.6 billion. It is a joint initiative by Hebei Jinneng Group, Hong Kong Jiantao Group and Xingtai Municipal Government. It includes joint coal-to-chemical manufacturing by Jinneng and Jiantao, and the restructuring of Hebei Jinneng Group into a Hong Kong – China joint venture company to be listed on the Hong Kong Stock Exchange.

Hebei Jinneng Group is a large-scale coal enterprise directly under the Hebei Provincial State-Owned Assets Supervision and Administration Commission. It was established on December 18, 2005, through the merging of Xingtai Mining Group and Handan Mining Group. Its operations now span over the three provinces of Hebei, Shanxi and Inner Mongolia. Currently, Jinneng's total asset is $1.83 billion and has an average annual sale of $1.24 billion. By 2010, Jinneng’s coal production will reach 28 million tons and its revenue will reach $2.6 billion.