12th Five-Year Development Plan for the Soda Ash Industry

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Development Plan for the Soda Ash Industry during the 12th Five-Year Plan Period, China Soda Ash Industry Association, 2011-07-15. China is a major producer of soda ash, and its output has consistently ranked first in the world for many years; the development of the soda ash industry has played an important role in promoting the country’s economic growth. However, in recent years, the rapid development of related industries such as real estate and flat glass has significantly boosted the demand for soda ash, leading to a swift expansion of its production capacity. To ensure the sustained, healthy, and stable development of the soda ash industry, this plan has been formulated in light of the actual conditions of the industry. I. Current Situation and Development Trends of the Industry (1) Current Situation of the Industry As of the end of 2010, there were 44 soda ash manufacturing enterprises in China. Among them, 14 enterprises had a production capacity of 600,000 tons per year or more (9 enterprises had a capacity between 300,000 and 600,000 tons per year, and 21 enterprises had a capacity of less than 300,000 tons per year). The combined production capacity of the top 10 soda ash manufacturers accounted for 62% of the total national capacity. “During the 11th Five-Year Plan period, China’s soda ash production capacity increased by about 9.4% on an annual average. By the end of 2010, China’s soda ash production capacity had reached 24.3 million tons, accounting for about 41% of the world’s total capacity. In 2010, China’s soda ash production was 20.47 million tons, accounting for about 42% of the world’s total production. (II) Problems and constraints in the soda ash industry 1. Excessive capacity growth and an oversupply in the market: During the 11th Five-Year Plan period, China’s soda ash production capacity expanded at a rapid pace. With the addition of new production capacity and intensified competition, market prices experienced greater volatility, leading to a significant decline in the economic efficiency of the soda ash industry. The sudden financial crisis in the second half of 2008 exacerbated the unfavorable conditions in this industry, causing sharp fluctuations in soda ash prices. Affected by the financial crisis, demand in the downstream sector was weak in 2009, and soda ash prices dropped to their lowest levels, resulting in losses across the entire industry. In 2010, the domestic economy stabilized and began to recover, leading to an increase in market demand. As a result, soda ash production rose rapidly, and domestic companies became more enthusiastic about investing. It is expected that during the 12th Five-Year Plan period, additional production capacity will be brought online in large quantities, and the soda ash industry is likely to enter another downward cycle. 2. The waste liquids and residues from the ammonia-alkali process are difficult to manage. The core issue related to environmental protection in ammonia-alkali production lies in these waste liquids and residues. In the ammonia-soda process for producing soda ash, about 10 m3 of waste liquid is generated per ton of soda ash, of which the solid residue amounts to approximately 300–350 kg. Due to the large volume produced, it is difficult to achieve comprehensive utilization on a large scale, which is also a challenge plaguing the world’s soda ash industry. (3) The proportion of integrated soda ash production is increasing, leading to intensified competition in the ammonium chloride market. Given that it is difficult to treat the waste liquids and residues generated by the ammonia-soda process, most new construction and expansion projects opt for integrated soda ash production. As the share of soda ash produced via the integrated process rises, the production capacity of ammonium chloride also increases rapidly; consequently, competition within the ammonium chloride market is becoming increasingly fierce. At present, over 90% of ammonium chloride is used in the production of compound fertilizers. In 2009, the operational rate of the compound fertilizer industry was only around 30%. Additionally, other nitrogen fertilizer industries such as those producing urea and ammonium phosphate also suffer from varying degrees of overcapacity. The overall downturn in the fertilizer market has had a significant impact on the sales of ammonium chloride. (III) Development trends of the soda ash industry 1. Soda ash production continues to rise, with further overcapacity. The downstream products of soda ash, namely flat glass and household glass, are experiencing rapid growth, which will continue to drive demand for soda ash; as a result, its production will also increase. By 2010, soda ash production had already exceeded 20 million tons. During the first three years of the 12th Five-Year Plan period, over 2 million tons of additional soda ash production capacity will be brought onto the market each year. It is expected that by the end of 2012, China’s soda ash production capacity will reach 30 million tons. 2. Ammonium chloride will constrain the survival and development of the caustic soda industry. As new caustic soda production plants come online, as well as those that are relocated or upgraded, the production capacity for ammonium chloride will increase rapidly; it is estimated that by the end of 2012, this production capacity will exceed 15 million tons. At the same time, the overcapacity in the production of nitrogen fertilizers such as urea and ammonium phosphate is increasing, putting pressure on the ammonium chloride market. Moreover, the main downstream products of ammonium chloride, namely compound fertilizers, are moving toward higher-concentration variants, which reduces the amount of ammonium chloride used; as a result, the market prospects for ammonium chloride are becoming increasingly limited. Therefore, the ammonium chloride issue will severely restrict the survival and development of union alkali. 3. New progress will be made in industry mergers and restructurings. There are a large number of soda ash manufacturers in China, with relatively small average scales; in particular, the companies involved in the production of combined soda ash originated from small and medium-sized nitrogen fertilizer enterprises, and these companies lack comprehensive competitiveness on the international stage. In recent years, China’s soda ash production capacity has grown rapidly, leading to severe overcapacity. Moreover, during the 12th Five-Year Plan period, more than 6 million tons of additional production capacity will be introduced into the market, which will further exacerbate this overcapacity situation. Competition among enterprises will intensify as well, and there will be new developments in mergers and reorganizations within the industry as well as between upstream and downstream entities. II. Guiding Ideologies and Principles (1) General Approach Thoroughly implement the scientific development concept, adopt an international perspective and strategic thinking to strike a balance between the present and the long term, vigorously promote scientific and technological innovation and progress, further intensify efforts in energy conservation and emission reduction, facilitate the healthy and stable development of the soda ash industry, and pursue a path of sustainable development. (II) Basic Principles: Adhere to the combination of technological transformation and independent innovation. Increase efforts to digest and absorb introduced technologies to drive industrial technological progress ； Strengthen technological transformation to promote the systematization and integration of industrial technologies ； Strengthen the research and development of key and cutting-edge technologies to enhance the role of independent innovation in driving industrial development. III. Directions and Tasks for Industry Development (I) Key Areas of Development 1. Adhere to total volume control and impose strict restrictions on new projects. In the development of the soda ash industry, it is necessary to maintain control over the overall volume of production; support large enterprises with high technical levels, good market prospects, and a significant role in industrial upgrading, so that they can grow stronger through technological upgrades and restructuring ； Strict control should be exercised over new projects; new soda ash projects must be approved by the provincial investment management authorities, and only after being deemed in line with industrial policies by relevant departments together with the China Soda Ash Industry Association and other parties can they be implemented. Make full use of and utilize some existing production capacities to further optimize the industrial structure ； Promote rational layout and coordinated development among the eastern, central, and western regions. In the eastern coastal areas where production capacity is concentrated, new capacity additions should be strictly controlled, with efforts focused on making progress in areas such as quality, product variety, technology development, and corporate restructuring. 2. Encourage independent innovation and the adoption of new \"energy conservation and emission reduction\" technologies. Support enterprises in pursuing independent innovation, promoting such technologies to improve product quality, reduce energy consumption, and lower costs. “During the 12th Five-Year Plan period, the use of advanced automated control technologies as well as large-scale and energy-efficient equipment in soda ash production was encouraged ； Promote the secondary filtration technology for heavy alkalis and belt-type alkali filters to reduce energy consumption ； It is more effective and refined for the multi-stage utilization of steam. The ammonia-alkali process promotes dry ash addition technology and vacuum distillation technology ； Promote the use of waste residues in flue gas desulfurization technologies and other comprehensive utilization technologies for waste residues. The combined alkali process promotes the granulation technology for ammonium chloride to increase the amount of ammonium chloride used as a standalone fertilizer ； Further improve the cold carbonization process, the thermal combined alkali process, and the new process for co-producing melamine and combined alkalis. 3. Improve the quality of soda ash products and increase the proportion of heavy soda ash and dry ammonium salts. During the 12th Five-Year Plan period, the quality of soda ash products in China was improved through adjustments to the product mix, with a focus on the quality of integrated soda ash products ； Increase the proportion of capacity for heavy soda ash and dried ammonium chloride production, striving to make each of these capacities account for over 50% of the total capacity in order to meet market demands. (II) Main tasks: Aiming to build China into a global leader in the soda ash industry, the following key tasks should be carried out during the 12th Five-Year Plan period: 1. Control the total output of soda ash products to maintain a basic balance between supply and demand. The industry’s medium-term plan aims to keep the production capacity of soda ash at less than 30 million tons by 2015, and the production capacity of ammonium chloride at less than 15 million tons. 2. Control the development of ammonia-alkali and double-alkali production capacity at a reasonable ratio. Further reduce energy consumption and minimize the discharge of waste liquids and residues. 3. Make efforts to increase the export of soda ash. The export strategy is one of the fundamental strategies for the development of China’s soda ash industry. “During the 12th Five-Year Plan period, over 6 million tons of additional soda ash production capacity will come online in China, resulting in increasing pressure on the domestic market. To alleviate this pressure, increasing soda ash exports is a necessary measure. By 2015, efforts will be made to achieve an export volume of 2.5 million tons of soda ash. 4. Make efforts to increase sales of ammonium chloride in order to alleviate concerns related to the combined alkali process. On the one hand, direct application of ammonium chloride as a fertilizer is encouraged, along with research and development of ammonium chloride granulation technologies and the creation of large-scale equipment for such granulation; on the other hand, efforts are made to increase the export of ammonium chloride. Research on the decomposition, modification, and further processing of ammonium chloride is also carried out simultaneously. 5. Further reduce consumption, lower costs, and enhance the market competitiveness of soda ash. By 2015, it is planned that for the ammonia-alkali process: the comprehensive energy consumption for producing light soda ash shall not exceed 400 kilograms of standard coal per ton of alkali; the ammonia consumption shall not exceed 4.5 kilograms per ton of alkali; the salt consumption shall not exceed 1,500 kilograms per ton of alkali (excluding the salt content in seawater), and the recycling rate of fresh water shall be over 95%. Sodium carbonate synthesis: The comprehensive energy consumption for lightweight soda ash is no more than 245 kilograms of standard coal per ton of soda ash; ammonia consumption is no more than 345 kilograms per ton of soda ash, salt consumption is no more than 1200 kilograms per ton of soda ash, and the water recycling rate is over 95%. Natural soda: The comprehensive energy consumption for producing light soda ash is no more than 550 kilograms of standard coal per ton of soda ash, with a water recycling rate of over 95%. IV. Policy and measure recommendations (1) Abolish the Salt Industry Management Regulations and fully liberalize the distribution of salt for industrial use. Salt used in the \"two alkali\" industries accounts for about two-thirds of the total salt consumption in the country. To meet the requirements of the market economy and to promote the development of raw salt producers as well as the industries related to the production of alkalis, it is called for that the Salt Industry Management Regulations be abolished as soon as possible, that the systems of permits and authorization stamps be eliminated promptly, that fees charged at intermediate stages be stopped, and that direct transactions between producers and consumers be established, thereby fully liberalizing the distribution of industrial salt. (II) Calcium chloride products should enjoy tax incentives. Calcium chloride is extracted from the waste liquid resulting from soda ash production; it is an environmentally friendly product, and it also has a wide range of applications. It is widely used in industries such as snow melting, oil drilling, dust removal, construction, drying, rubber manufacturing, metallurgy, papermaking, chemicals, refrigeration, food processing, and printing and dyeing. Currently, soda ash manufacturers using the ammonia-alkali process recover around 400,000 tons of industrial salt and around 800,000 tons of calcium chloride from waste liquids each year. The production cost is lower than that of calcium chloride produced by reacting limestone with hydrochloric acid, **and it should be encouraged. Calcium chloride is a product primarily exported, mainly to Japan and South Korea. Our country’s annual exports exceed 50% of its total production. Apply for an exemption from value-added tax on calcium chloride products, and restore export tax rebates for calcium chloride, so that calcium chloride manufacturers can survive and develop. (III) Encourage the development of technologies for the comprehensive utilization of waste residues from ammonia-alkali enterprises. Ammonia production waste residues represent the primary environmental issue restricting the development of such enterprises. In recent years, ammonia-alkali enterprises such as Qingdao, Nanfang, and Haihua have used ammonia vaporization waste residues and salt sludge for the desulfurization of boiler flue gases, achieving dual-purpose treatment and thus playing a role in protecting the environment. It is recommended to **encourage power plants that have the necessary resources to adopt waste residue desulfurization technology for treating boiler flue gases, and to promote the use of this technology, as it has yielded good economic benefits. (IV) Strengthen supervision and further implement industry policies. During the 11th Five-Year Plan period, a series of policies and regulations related to the soda ash industry were drafted and introduced, such as the \"Clean Production Standards for the Soda Ash Industry,\" the \"Plan for Promoting Clean Production in the Soda Ash Industry,\" the \"Access Requirements for the Soda Ash Industry,\" the \"Plan for the Adjustment and Revitalization of the Petroleum and Chemical Industries,\" and the \"Guidelines for Adjusting the Industrial Structure of the Soda Ash Industry.\" It is recommended that relevant supporting policies and measures be introduced as soon as possible to ensure that these policies and regulations can play their full role.