Status of coal chemical industry project construction in Inner Mongolia Autonomous Region

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Inner Mongolia is an important coal resource area and production base in China, possessing the resource advantages and conditions necessary to develop large-scale coal chemical industries. In the past two years, the Party Committee of the autonomous region and ** have attached great importance to the development of the coal chemical industry as well as the construction of key projects. To date, the autonomous region has launched 6 coal-to-methanol projects, with a total construction capacity of 4.85 million tons per year; of this, the capacity put into operation in this phase is 2.95 million tons per year ； There is 1 coal-based ammonia synthesis project that has already started operation, with an annual production capacity of 180,000 tons ； Two coal-to-oil projects have already commenced operation, with an annual production capacity of 1.24 million tons. Eight coal-to-methanol and downstream products processing projects are expected to commence construction in 2007, with a total annual production capacity of 5.62 million tons (on a methanol equivalent basis) ； Five coal-based ammonia synthesis projects are expected to start operation in 2007, with a total construction capacity of 2.48 million tons per year, of which the capacity for this phase is 1.58 million tons per year. The main construction projects are as follows: 1. Shenhua Coal Direct Liquefaction Project. The total capacity of the Shenhua Coal Direct Liquefaction Project is 5 million tons of oil products per year, and it is constructed in two phases. Phase I has a capacity of 3.2 million tons of oil products per year, and it consists of three main production lines, including 14 key production units such as coal liquefaction, coal-to-hydrogen production, solvent hydrogenation, hydroprocessing, and catalyst preparation. The State Council approved the project proposal for this project in March 2001, the feasibility study report in August 2002, and the competent department of the State Council authorized the start of construction in August 2004. The first production line that has been put into operation currently is a coal direct liquefaction demonstration project that produces 1.08 million tons of various petroleum products, including 102,000 tons of liquefied petroleum gas, 720,000 tons of diesel, 250,000 tons of naphtha, and 8,000 tons of other products such as phenol. The demonstration project for direct coal liquefaction has entered its peak construction phase; the detailed engineering design for various units has been largely completed, and the main process equipment and materials have been ordered and are being delivered to the construction site one after another. The on-site civil engineering work has entered the final stage; the steel structure has been fully installed, and some equipment has begun to be installed. Among these, the world’s largest coal direct liquefaction reactor, weighing 2,250 tons, has been manufactured and lifted into place on June 17, 2006. The factory for welding heavy equipment has been built and put into operation, and the water source project outside the factory has started trial operations. Auxiliary facilities such as the office building in the front area of the factory and the warehouse for the entire plant have also been put into use. By the end of 2006, a total of 7.6 billion yuan had been invested in the project. II. Yitai Group’s Coal-Based Synthetic Oil Project: The annual production capacity of 480,000 tons for the coal-based synthetic oil project undertaken by Inner Mongolia Yitai Group Co., Ltd. (with 160,000 tons in the first phase) is based on the \"industrialized slurry-bed technology for the synthesis of coal-based liquid fuels\" developed by the Shanxi Institute of Coal Chemistry under the Chinese Academy of Sciences. It represents the first project to achieve industrial-scale production using domestic coal indirect liquefaction technology that relies entirely on independent intellectual property rights. This project plays a significant role as a model for local coal enterprises to pursue a new path of industrialization, to shift from an extensive development model to a more efficient one, to develop a circular economy, and to raise the level of industrial development. The project is located in the Dalu New Area of Zhungeer Banner, Ordos. Construction began in May 2006, and the design work has now been fully completed. The foundation work for the gasification section, oxygen and coal storage areas, boiler room, chimney, irrigation area, and the administrative building has been finished. The installation of the 12,487-meter-long underground pipeline network, consisting of three vertical and four horizontal lines, has also been completed. Orders have been placed for long-term-use equipment such as gasifiers, boilers, air separation units, synthesis reactors, circulating water cooling towers, liquefied petroleum gas storage tanks, and high-pressure slurry pumps. The project fully entered the installation phase in 2007, with an investment of 1.1 billion yuan planned. It is expected that single-unit testing will take place from March to the end of May 2008, with the first phase of the project coming online in mid-August. III. Dalun Datang Coal-based Olefins Project – On-site construction of the chemical workshop. This project is the first phase of the construction of the Dalun coal chemical complex by China Datang Group; its capacity is to produce 1.6 million tons of methanol per year, which can be converted into 460,000 tons of olefins. The total investment planned for this project is 12 billion yuan. The construction site is located in the development zone of Dolun County, Xilin Gol League. The project officially commenced in May 2005; to date, the power plant area has been thermally sealed, and the main equipment is currently being installed ； Key chemical processes such as gasification and air separation are under construction, with the necessary equipment already ordered. A total investment of 3.77 billion yuan has been made so far. In 2007, an investment of 5 billion yuan was planned; the power plant was ready for operation, the structure of the gasification unit and the steel structures were completed, installations were carried out in other areas of the chemical plant, and some auxiliary facilities were finished. The entire project is scheduled to begin trial operation and start production in the first half of 2009. IV. SNOW GROUP’s Coal-to-Methanol Project: This project is part of the first phase of SNOW GROUP’s heavy chemical industry complex in Ordos. Its production capacity is 600,000 tons of methanol and 400,000 tons of dimethyl ether per year. The total investment required for this project is 2.4 billion yuan, and it will be built in Dalaat Banner, Ordos City. On June 8, 2006, construction of this project officially began. To date, 76.47 million yuan has been spent on construction work, 783.23 million yuan on equipment procurement, and 13.136 million yuan on other infrastructure-related expenses. In 2007, the work on equipment procurement and engineering design will continue; it is planned to complete all equipment orders by August 2007, and to finish all construction drawings by June 2007. By the end of 2007, the water system, coal conveying system, and power system had been successfully tested. The construction work for the process plant has been fully completed, providing the conditions necessary for equipment installation. Trial operation and commissioning took place in the first half of 2008. V. Jiutai Energy Inner Mongolia Co., Ltd.’s dimethyl ether project: This project involves the production of 1 million tons of methanol and 300,000 tons of dimethyl ether per year by Jiutai Energy Inner Mongolia Co., Ltd., with a total planned investment of 4.6 billion yuan. In accordance with Ordos City’s urban development plan, the facility was relocated from its original location in Yijinhuoluo Banner to the Dalu New Area in Zhungeer Banner. Currently, a new site for this project has been selected; soil surveys and construction drawings are being prepared, and the main equipment as well as the long-cycle manufacturing machinery have already been ordered. Construction on this project is expected to begin in full in July this year; the underground pipeline network is scheduled to be completed within the same year, and the foundation work for the civil structure is set to reach a depth of 0 meters. An investment of 1 billion yuan is planned for this project. VI. Inner Mongolia Sanwei Company’s coal-to-methanol project: Inner Mongolia Sanwei Coal Chemical Technology Co., Ltd. has an annual production capacity of 1.2 million tons of methanol and 400,000 tons of dimethyl ether, with a total investment of 4.6 billion yuan. Construction has now begun on Phase 1, with an annual methanol production capacity of 200,000 tons and an investment of around 900 million yuan. The project is located in the Dalu Industrial Park, Zhungeer Banner, Ordos. At present, the construction of the underground pipeline network for this project has been completed; the civil work related to the boilers is finished and ready for installation. 50% of the work on the circulating water and soil systems has been done, while the offices, dormitories, and metalworking workshops are complete. The underground part of the gasification chamber has been finished, the chimney has been built to its full height, and one-third of the total earthwork has been completed. As of December 2006, 60 million yuan had been invested in civil engineering work, while 300 million yuan was spent on equipment purchases. It is planned to complete all civil engineering work by the end of June 2007, finish equipment installation by the end of October, and carry out trial operations in November. In 2007, an investment of 500 million yuan was planned. VII. Nailun Group’s 300,000-ton synthetic ammonia and 520,000-ton urea production project: The project undertaken by Inner Mongolia Nailun Group Co., Ltd., which involves an annual production capacity of 300,000 tons of synthetic ammonia and 520,000 tons of urea, has been registered with the Autonomous Region’s Development and Reform Commission. The total investment in this project is 2.16 billion yuan, and it is located in the Dalu New Area of Zhungeer Banner, Ordos City. To date, all the main supporting documents for the project have been obtained, the core patented technologies have been acquired, the design work has been fully launched, and the main equipment has been ordered. Construction will commence in full in June 2007; it is planned to complete all civil engineering works by the end of November, followed by the delivery and installation of the main equipment. The investment for the project’s construction is scheduled to reach 500 million yuan by the end of 2007. The project was completed and put into operation at the end of 2008. VIII. Shenhua Group (Baotou) Coal-to-Methanol to Olefins Project: The capacity of this project is to produce 1.8 million tons of methanol, 300,000 tons of polyethylene, and 300,000 tons of polypropylene per year, with a total planned investment of 11.8 billion yuan. The project is located in Jiuyuan District, Baotou City. The project has been approved by the National Development and Reform Commission; the core technologies for the project have been secured, and the implementation of technologies for various components is progressing steadily. The procurement of long-term-use equipment is in progress, some of the design firms for the key components have been identified, the land acquisition process is largely complete, and the railway spur line has been essentially built. In 2007, an investment of 1.3 billion yuan was planned, primarily to complete the installation of the underlying pipeline networks, the construction of the foundations for the main equipment, and the ordering of necessary equipment. IX. Xilinhe Coal Chemical’s 180,000-ton synthetic ammonia and 300,000-ton urea production project: This project, which involves an annual production of 180,000 tons of synthetic ammonia and 300,000 tons of urea, is the result of relocating a facility that was originally built in the Tangshan area of Hebei Province to the Wulagai Administrative Region in Xilin Gol League. The project officially commenced in July 2006. The civil foundation work for the office building and the central control room, as well as the pile foundation work for the main equipment, has been completed. Tendering and ordering processes for large-scale equipment such as the Endler furnace and air separation units have been finished, and the relocation of the three main sets of equipment—high-pressure machines, low-pressure machines, and ice makers—is to be completed by the end of the year. A total of 410 million yuan in investment has been completed so far. In 2007, it was planned to invest 800 million yuan; all civil engineering work would be completed, the equipment would be installed and tested, and the facility would be ready for operation by the end of the year. X. Shilin Chemical’s Coal-to-Methanol Project: The 1.2 million tons per year coal-to-methanol project operated by Uxin Banner Shilin Chemical Co., Ltd. has been registered with the Autonomous Region’s Development and Reform Commission. This project utilizes the two-stage dry coal powder pressurized gasification technology developed by Xi’an Thermal Power Research Institute (a major technological achievement of the 863 Program). The project is implemented in phases, with the first phase having an annual production capacity of 300,000 tons of methanol; the total investment for this project amounts to 775 million yuan. The project is located in Wushen Banner, Ordos City. The approvals for all prerequisite conditions for this project have been largely obtained ； Basic living facilities such as office buildings, expert apartments, staff dormitories, and restaurants have been put into use ； Contracts have been signed for some of the main equipment in the first-phase 300,000 tons per year methanol project; equipment with long lead times such as those for the gasification unit, air separation plant, and boilers has been ordered, with expenditure on equipment purchases amounting to 79.8 million yuan. At present, pile-driving work is being carried out for the foundations of buildings such as the gasification island, air separation unit, boilers, and tank areas, as well as for the main equipment. An investment of 500 million is planned to be made in 2007.