Construction on $3 Billion Coal-Chemical Project Begins in China

Construction for China Oceanwide Holdings Group's (COHG) (Beijing) coal-chemical project has begun in Moteyou Qi in the Inner Mongolia Autonomous Region. The $3 billion project covers an area of 680 hectares. After Phase I construction is complete, COHG will have the capability to produce 180 tons of methanol every year with an expected sales volume of more than $1 billion. The project will use clean coal technology, compliant with China's sustainable-development strategy and energy industrial policy.

China's quick economic development in the past 20 years has prompted a need for more resources to meet energy demand. Until 1993, China was a net exporter of oil; but in 2006 the crude oil that China imported amounted to 145.2 million tons, 47% of the country's consumption. As China's oil imports increased, the international oil price surged. In 2006, China's oil imports increased by 14.5% compared with the previous year, and the importing value jumped 39.2%.

To address the energy strain on its economy, China is devoted to looking for substitutive resources for oil. The country is turning to its abundant coal reserves. Statistics show that China has coal reserves of 114.5 billon tons, 12.6% of world's total, with Inner Mongolia boasting expected reserves of 12 billion tons. Before 2020, China will spend more than $130 billion on the development of its coal-chemical industry, producing methanol, dimethyl ether (DME), alkene, etc.

In the past, there were two concerns for which China hesitated to invest in the industry: the negative impact it could have on the environment and the economic feasibility. With clean coal technology, products such as methanol and DME have proven to be more efficient and environment-friendly than traditional fuels. Under the circumstances of high oil price, the coal-chemical industry could become profitable and keep China from relying too much on foreign oil.