Another wave of enthusiasm for modern coal chemical industry development is emerging

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Source: China Chemical Industry News. Recently, there have been continuous reports from various regions regarding coal chemical projects that are either going into operation, starting construction, or having been approved, which is quite impressive; modern coal chemistry in China is experiencing another surge in activity. 　　　However, experts point out that there are still many unresolved issues with coal chemical projects, and the market environment is unfavorable; if everyone rushes into these projects, the consequences could be unpredictable. The pace has been quite fast – recently, within less than a month, news of numerous coal chemical projects has emerged one after another. For example, the Environmental Protection Department has officially approved the environmental impact assessment for a 600,000-ton coal-to-olefins project in Qinghai; the first phase of Shenhua Yulin’s circular economy coal utilization project, worth 100 billion yuan, has begun construction; Yankuang Group’s Shaanxi Future Energy Chemicals Co., Ltd. held a groundbreaking ceremony for its 1 million-ton/year high-temperature Fischer-Tropsch coal indirect liquefaction project; Shaanxi Coal Group signed a contract for a coal chemical project worth 12.3 billion yuan in Yulin; a coal chemical project worth 90 billion yuan was established in Linfen, Shanxi; Yueneng Group signed a contract for a project that produces 300,000 tons of coal-based ethylene glycol along with other high-value chemicals per year; Guizhou Bijié’s 2 million-ton/year coal-based clean fuel project received approval for its water resource planning; Zhong’an United’s 1.7 million-ton coal-to-olefins project is under overall coordination and control; all five large-scale coal chemical projects in Ordos’ Dalu District have resumed operations... Not only are there many such projects, but the scale of each individual project, whether already completed or under planning, is also increasing. ”Cui Jun, an analyst at the China Information Research Institute for Chemical Industry, explained that, for example, the scale of a single coal-to-olefins project is 1.4 million tons per year, that of a single coal-to-oil project is 4 million tons per year, that of a single coal-to-natural gas project is 26 billion cubic meters, and that of a single coal-to-ethylene glycol project is 700,000 tons per year. Projects involving investments of hundreds of billions, or even trillions, have begun to emerge one after another. Such projects were unimaginable in previous years, and there were no precedents for them on the international stage as well. 　　　“Our tracking shows that coal chemical projects in our country are indeed quite popular. ”Cui Jun said that as of the end of May this year, there were 70 coal-to-natural gas projects in operation, under construction, or planned in China, with a total production capacity of 200 billion cubic meters. However, according to the **13th Five-Year Plan for the Development of Advanced Coal Processing Industries**, only 18.2 billion cubic meters of capacity is planned for new projects ； There are 19 coal-to-oil projects that have been built, are under construction, or are planned; their total capacity exceeds 30 million tons. In contrast, the scale of new projects outlined in the 13th Five-Year Plan is only 6.8 million tons ； There are 72 coal-based olefin projects that have been built, are under construction, or are planned, with a total capacity of over 33.85 million tons ； There are 81 coal-based ethylene glycol projects that have been built, are under construction, or are in the planning stage, with a total production capacity of over 20.4 million tons. Roughly estimated, if all these coal chemical projects are completed, the total value of the assets will reach the trillions of dollars scale. 　　　Reporters’ investigations have shown that coal chemical projects in China are carried out in 23 provinces, most of which are located in regions rich in coal such as Inner Mongolia, Xinjiang, Shanxi, Shaanxi, Ningxia, and Gansu. However, there are also some coal chemical projects in areas where coal resources are scarce or even non-existent. 　　　Tang Hongqing, a technical advisor and senior engineer at Zhongke Synthetic Oil Company, believes that due to factors such as the market, environmental regulations, funding, and technology, although many projects have received approval and permits, not as many actually start construction. Some projects are still on hold, and this gradual shift toward rationality is somewhat reassuring. 　 　It’s a bit difficult to make money. “Currently, over 80% of the olefins in the market are produced through petroleum-based processes; therefore, olefins are closely linked to international crude oil prices.” Due to the sharp rise in the price of raw coal, olefin prices have remained low, and under pressure from both ends, it has become increasingly difficult to achieve profitability in coal-based olefin production. Although some coal-to-olefins projects are able to generate profits, this is mainly because certain companies possess their own coal resources and can use this coal at lower costs through internal transactions for the production of olefins; in effect, part of the profits associated with coal is transferred to the olefins as a result of this integration within the industrial chain. But not all coal-to-olefins projects have this advantage. ”Cui Jun analyzed. 　　　Tang Hongqing believes that the coal-to-oil projects that were put into operation earlier are currently affected by international oil prices, as well as factors such as high consumption taxes, low production levels, and poor production stability. Among the coal-to-oil projects that are already in operation, including those run by Shenhua, Yitai, and Lu’an, aside from a few smaller projects that manage to make a slight profit by switching to the production of chemicals, the larger projects generally do not generate any profits. Some of them have even found themselves in the awkward situation of having to switch to the production of other coal-based chemical products or reduce their production capacity. 　　　Meng Lingjiang, general manager of Xinjiang Qinghua Group, said that the production capacity of the first phase of Xinjiang Qinghua’s coal-to-gas project, with a capacity of 5.5 billion cubic meters per year, has reached over 80%, resulting in a monthly output of nearly 100 million cubic meters. However, at present, due to natural gas prices, the company is facing increasing difficulties in its development. According to investigations by reporters from China Chemical Industry News into the 4 coal-to-gas projects that are already in operation, all of them are currently losing money due to excessively low prices, as well as the fact that none of these projects have reached their designed production capacity. 　　Due to limitations in the demand from downstream enterprises, the production capacity of coal-based ethylene glycol projects remains low, making it difficult to achieve profitability. 　　　The reporter learned of a case in which, since its commissioning, a coal chemical enterprise in a certain area had achieved production levels corresponding to its designed capacity, yet it continued to incur losses year after year. Recently, its parent company required it to prepare a plan to turn losses into profits over the next 5 years, but despite every effort made, the company was unable to come up with a plan that would enable it to be profitable. The fundamental reason is the high investment costs incurred during project construction, which results in ongoing high financial expenses. Additionally, since the industry in question suffers from severe overcapacity, prices cannot rise. These combined factors make it difficult for companies to achieve profitability no matter how hard they try. There are many other similar coal chemical enterprises as well. 　　　“Based on our information, under the current international crude oil price environment, aside from a few coal-to-olefins projects and individual coal-to-ethylene glycol projects that generate slight profits, the vast majority of coal chemical projects in China are operating at a loss. ”Cui Jun told a reporter from China Chemical Industry News. 　　　There are quite a few issues. “In accordance with the requirements of the ‘13th Five-Year Development Guidelines for Modern Coal Chemical Industry’, project demonstration remains the main task for the coal chemical industry in the coming period.” ”Huang Xinping, an expert in the coal chemical industry, believes that based on the problems identified in the coal chemical demonstration projects, there are still many issues related to such projects that have not been fully resolved. 　　　Huang Xinping said that at present, the issue of suboptimal design plans for many coal chemical projects remains quite prominent. As for the coal chemical projects that have been built and put into operation in China, the lack of competitiveness in many of these projects is due to issues in their design. There are many reasons for this; these include issues such as insufficient design capabilities and experience on the part of the design firms, as well as suboptimal design solutions. Additionally, there is the problem of owners being too eager to see results, ignoring the objective laws governing the construction of coal chemical plants. 　　Huang Xinping gave an example: for instance, with regard to system configuration issues, modern coal chemical plants are large in scale and mostly adopt multi-series configuration schemes. However, system optimization is insufficiently considered in some projects, and the layout plans as well as the public utility systems are not optimized enough. The result of these problems is that, due to suboptimal and inadequate design, production becomes unstable after the project is completed, and there is alarming waste of energy and materials, making it difficult to control product costs. This is a problem that is almost universal among completed projects, though to varying degrees. 　　　Industry experts told reporters that the problem of \"using coal at the beginning and water at the end\" in China’s coal chemical industry is also quite prominent. Tang Hongqing believes that many coal chemical projects that have been put into operation in China are facing significant difficulties due to issues related to coal, and efforts to resolve these problems are still ongoing. The so-called “coal head” problem is mainly reflected in two aspects: first, the gasification technology for coal chemical projects has not yet been fully perfected. For example, in some projects, the gasifier does not match perfectly with the type of coal available at the project site, resulting in an unstable and incomplete gasification process. As a consequence, the output of syngas is insufficient to meet the needs of subsequent production processes, preventing the project’s capacity from being fully utilized. 　　　Second, a local imbalance in coal supply and demand has emerged. For example, the total approved coal production capacity in the Mengdong region is 35.8 million tons. After accounting for the coal needed for coal-fired power generation and other industrial projects, only 17 million tons of coal remain available for coal chemical projects. However, the two existing coal chemical projects in this region require more than 32 million tons of coal per year based on their designed production capacities, resulting in an imbalance in coal usage ； In some areas where coal chemical projects are concentrated, the issue of insufficient coal resources has begun to emerge, yet this problem has not received the attention it deserves from the industry. 　　　The so-called water tail problem refers to the fact that wastewater treatment in projects has become a bottleneck for many of them. An environmental engineer in the industry told a reporter from China Chemical Industry News that **when approving coal chemical projects, zero wastewater discharge is required, but in reality, due to the large volume of wastewater generated by such projects, the cost of treating it using current wastewater treatment technologies is very high. Furthermore, the wastewater treatment processes for coal chemical projects are generally lengthy; achieving zero wastewater discharge requires systematic comprehensive analysis and solution-oriented approaches. It is necessary to incorporate concepts of clean production, sustainable production, and energy conservation and emission reduction during the project planning, feasibility study, and design stages, as well as to conduct systematic studies on various environmental issues related to water, gas, slag, as well as sound, light, and odor.