4.4-billion-yuan EPC general contract for Shaanxi coal chemical project signed

Thread Content

On January 18, Shenwu Environmental Protection announced that the company and its wholly-owned subsidiary, Hongyang Metallurgical and Chemical Engineering Technology Co., Ltd. (hereinafter referred to as “Hongyang Metallurgical and Chemical”), jointly signed the \"EPC General Contract for the Project of Classified and Graded Utilization of Coal by Shaanxi Lianggu Clean Environmental Protection Technology Co., Ltd.\" (hereinafter referred to as the \"General Contract\") with Shaanxi Lianggu Clean Environmental Protection Technology Co., Ltd. on January 17, 2018; the total value of the contract was 439.5 million yuan. Under this contract, Shaanxi Lianggu acts as the employer, while the company and Hongyang Metallurgical Chemicals serve as the contractors; the preheating furnace pyrolysis technology owned by Shenwu Group is utilized to advance the construction of the \"Shaanxi Lianggu Clean Environmental Protection Technology Co., Ltd. Coal Classification and Utilization Project\". The total capacity of the project is 4 million tons per year for coal pyrolysis, 350,000 tons per year for coal tar hydrogenation, 20,000 Nm3/h for hydrogen production, and 55,000 tons per year for needle coke. This project is a key initiative of the Northern Shaanxi high-end energy and chemical industry base. Shenwu Environmental Protection states that this major contract and project development are aimed at making use of the abundant coal resources in the Shenmu area of Yulin to produce high-value-added products such as semi-coke, blending oil components, and needle coke, through the company’s proprietary preheating furnace pyrolysis technology. In the first phase of the project, a preheating furnace pyrolysis process is used to process 4 million tons per year of raw coal, producing 2.77 million tons per year of semi-coke. Coal tar with a capacity of 350,000 tons per year is hydrogenated to produce products such as Component 1 and Component 2 for blended oils, while the needle coke process is utilized to produce 55,000 tons per year of needle coke. According to analysis, the end product of this project contains high-quality needle coke. In 2017, China’s production of needle coke was 143,000 tons, while the market demand was 440,000 tons; thus there was a shortage of 300,000 tons, meaning that the supply of needle coke fell short of demand. It is estimated that by 2020, the output of needle coke from projects under construction in China will reach 345,000 tons, but there will still be a shortfall of over 300,000 tons, failing to meet the demands of downstream markets. The price of needle coke rose significantly, from 3,000–4,000 yuan at the beginning of 2017 to 20,000–28,000 yuan by the end of 2017. Shenwu Environmental Protection states that the construction of this project will enable a significant industrial upgrade, transforming the local coal chemical industry from a simple form of coal processing into one that incorporates high-end new materials. It will also facilitate the clean and efficient use of coal, promote the upgrading of the traditional coal chemical industry, and advance reforms in the energy supply sector. The construction of this project serves as an important model for the application of technologies in the field of coal pyrolysis by Shenwu, and it will have a significant positive impact on Shenwu’s future order acquisition and business performance.