Injection of ethylene glycol produced from coal leads to a significant increase in Ely’s net profit

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The use of coal-based ethylene glycol leads to a significant increase in Ely’s net profit. Author/Source: Huahua Network – Coal Chemical Industry. Date: November 7, 2018. Clicks: 4. Recently, Ely Clean Energy (600277) released its third-quarter financial reports, with three points worth noting: first, the net profit after deducting non-recurring items amounted to 558 million yuan, representing a year-on-year increase of 115.39%； Secondly, the earnings per share were 0.2 yuan, representing a year-on-year increase of 53.85% ； Thirdly, the acquisition of the coal-to-ethylene glycol project assets of Ordos Xinhang Energy Co., Ltd. was successfully approved by the shareholders’ meeting, and the company is set to become a listed entity. The inclusion of Xinhang Company’s coal-based ethylene glycol assets in the financial statements would significantly increase the company’s net profit for that year. Previously, Ely Green Energy had disclosed that from January to May this year, its ethylene glycol-related assets generated operating revenues of 1.52 billion yuan, a net profit of 219 million yuan, and an operating cash flow of 790 million yuan. Following the full consolidation, it will \"contribute\" to Yili Jieneng achieving high growth in its performance in 2018. In August 2018, Ely Green Energy announced an investment of 1.6 billion yuan to acquire a coal-based ethylene glycol project that had been developed by an affiliated company over many years. Of the two companies acquired this time, the primary asset is the coal-to-ethylene glycol project of Ordos Xinhang Energy Co., Ltd. Xinhang Company is the operator of the ethylene glycol project, which means that if the acquisition is successful, the listed company will introduce an ethylene glycol business for the first time. Flexibility is focused on the product; ethylene glycol assets exhibit high profitability flexibility. At present, Yili Jieneng possesses a production facility capable of manufacturing 300,000 tons of coal-based ethylene glycol per year. Since its commissioning, it has operated safely on a sustained, full-capacity basis with excellent performance, achieving 100% capacity utilization and sales rates, with over 97% of the output being of top-quality. It has clear advantages over coal-based ethylene glycol plants that have already been put into industrial and commercial operation in China: high operating load per unit plant, long operational duration, mature and stable technology, low production costs, high output, and product quality comparable to that of petroleum-based processes. The company has also been named one of the “Top 10 Polyester Factory Suppliers” for several consecutive years. In October, during the annual routine shutdown for maintenance, the ethylene glycol synthesis unit underwent technical upgrades and catalyst replacements in related processes, which enabled its operating load rate to be increased effectively to 110%. At present, China’s apparent consumption of ethylene glycol continues to increase every year. In 2018, it is estimated to be around 17.5 million tons, with a self-sufficiency rate of less than 45%. In ethylene glycol production plants, 90% use the petroleum route, while 10% use the coal-based route. Due to factors such as the rapid rise in oil prices, the appreciation of the US dollar, and increased tariffs on China’s imports of ethylene glycol from the United States, the production cost of ethylene glycol produced via oil-based routes is gradually rising. On the contrary, the process route for synthesizing ethylene glycol using eutectic oxalate has begun to regain prominence, thanks to its advantages of low cost, short production process, and high technical economics. At present, Yili’s ethylene glycol production chain is capable of producing 600,000 tons of raw material gas per year. Of this amount, 300,000 tons are used to produce ethylene glycol, while 300,000 tons are used to manufacture agricultural organic fertilizers such as urea and carbon-based fertilizers through the production of ammonia. Meanwhile, during the production of ethylene glycol, the economically valuable by-product DMC (dimethyl carbonate) can also be obtained. In the future, the company will be able to adjust its product focus as needed, depending on the conditions in the markets for ethylene glycol and synthetic ammonia. Firstly, through technological upgrades and the addition of new equipment, it is possible to increase the production capacity of ethylene glycol to 700,000 tons per year in the short term ； Second, by producing products such as carbon-based compound fertilizers from synthetic ammonia, new \"blue ocean\" markets with high profit margins can be explored. By overcoming technical challenges, the circular economy will serve as a stabilizer for high growth. The two-step oxalate route used by Ely’s ethylene glycol production starts with coal as raw material; after synthesizing syngas, CO and H2 are separated and purified. CO is then used in catalytic coupling reactions to form oxalates, which are subsequently hydrogenated together with H2 to produce ethylene glycol. Meanwhile, this method also yields the economically valuable byproduct DMC. Due to its characteristics such as a short process flow, few intermediate steps, and low production costs, it has become the best choice for the full industrial and commercial application of coal-based ethylene glycol production processes. This process route also presents significant technical challenges, particularly in the utilization and recovery of hydrogen. For example, coking of the catalyst occurs after hydrogenation, resulting in a short service life and an inability to operate for extended periods, which in turn leads to a low overall operational rate of the facility ； At the same time, excessive hydrogen consumption also directly leads to increased production costs for ethylene glycol. It is reported that Ely Green Energy has effectively solved these problems. Currently, the ethylene glycol synthesis unit of the company has been using hydrogenation catalysts for over 15 months. At the same time, by adding a PSA recovery system, over 85% of the hydrogen can be effectively recovered. This measure has also effectively reduced direct production costs: the hydrogen consumption per ton of ethylene glycol has dropped from 1800 Nm3 to 1580 Nm3. At a cost of 1 yuan per cubic meter of hydrogen, this reduces the direct production cost by 220 yuan per ton. In addition, the company’s technical team has, through technological innovations, effectively addressed the issue of high salt content in the wastewater discharged, enabling the use of wastewater with high salt concentrations for long-term stable operation and achieving zero discharge of treated wastewater ； By adding the resin bed unit, it was ensured that all material taken from the ethylene glycol distillation side stream was of top quality ； By adding a crude ethylene glycol recovery unit, the rate of high-quality ethylene glycol reached over 97% ； Through energy-saving and safety backup devices, the recovery and utilization of waste gas in the entire project have been improved, resulting in energy savings and increased efficiency while minimizing waste gas emissions. By acquiring the ethylene glycol assets, Ely Green Energy is becoming larger and stronger in the field of the circular economy, with its intention to develop a flagship for a \"three-tier growth strategy\" becoming increasingly clear. Whether it is the Dalat Banner Integrated Circular Economy Industrial Park, which takes Yili Chemical and its calcium carbide production unit as its core elements with PVC and caustic soda as its main products, or the Duguitala Industrial Park, which is centered around Xinhang Company and Yiding Company and features ethylene glycol and carbon-based fertilizers as its key products, both areas fully leverage the advantages of \"industrial ecologization and ecological industrialization.\" They strive to achieve overall industrial synergy within the businesses of the listed companies, by combining existing mature businesses, growing businesses, and forward-looking businesses in order to create unique competitive advantages in the industry.