China's largest coal-to-methanol facility goes into operation

China's largest coal-to-methanol production facility went into operation late last week, a company official with the developer of the project told Interfax Wednesday.

The project, owned and operated by the chemical subsidiary of Shandong Yankuang Group, will produce 500,000 tons of methanol a year, the head of the company's technical department, surnamed Tan, said. Yankuang Group is one of the country's largest state-owned coal producers.

With a total investment of RMB 2.22 billion ($304 million), the project is expected to bring in an annual sales revenue of RMB 1.09 billion ($149.3 million) and a net profit of RMB 222 million ($30.41 million), Tan said. The company also plans to build a second phase for the project, which will have a production capacity of 1 million tons.

Technical and environmental assessment reports for the second phase have already been completed, he said.

Shandong Province-based Yankuang Group owns reserves of about 1 billion tons of high-sulfur coal, but that resource is rarely used in power generation because of costly desulfurization expenses. Methanol production provides an ideal channel for utilizing the coal, Tan said.

Despite unresolved safety, environmental and distribution concerns regarding utilizing methanol as fuel, methanol is considered the most promising alternative fuel to reach commercial scale in China, due to the country's abundant coal resources and relatively low production costs.

China attained an annual methanol production capacity of 10.36 million tons as of the end of 2006, and has a projected annual capacity of 20 million tons for 2010.

Currently, the cuntry still lacks a national standard for fuel methanol. It aims to have three national standards, the Denatured Fuel Methanol Standard, the High Proportion Auto Methanol Fuel Standard and the M15 Auto Methanol Fuel Standard, in place by end of June 2008. The provinces of Shanxi, Shaanxi, Sichuan and Heilongjiang, as well as the Xinjiang Uygur Autonomous Region, currently practice their own provincial methanol fuel standards.