Major breakthroughs are urgently needed in the subsequent application technologies of coal chemical industry

Thread Content

As capital- and technology-intensive industries, coal chemical plant construction and commissioning take a long time, and they have a low capacity to withstand risks. The recent sharp drop in international oil prices, along with the sluggish conditions in both international and domestic markets, have caused coal chemical projects that were once highly sought after to lose their price advantage. Their existing flaws have become even more apparent, pushing them into difficulties. 　　Despite the sharp deterioration in market conditions, large enterprises operating coal chemical projects on a long-term basis have remained quite calm. They believe that while market fluctuations present challenges, they also offer opportunities, and companies are consolidating their resources in anticipation of the next economic cycle. At the same time, due to the imperfectness of coal chemical technology and related application technologies, experts in the industry have not reached a consensus on coal chemistry; breakthroughs in such technology remain the bottleneck restricting the development of this industry in the future. 　　Industry experts say that in fact, the companies that invested in coal chemical industries a few years ago have been able to recoup their costs in the past two years; the substantial profits generated in those two years are sufficient to help these companies withstand the risks posed by this financial crisis. It is a good time for companies that wish to enter the coal chemical industry. Those projects that were launched just last year or this year are the most affected by market fluctuations; if companies do not have sufficient financial strength, it will likely be difficult for them to overcome these difficulties. 　　Low oil prices highlight the low input-output efficiency of coal chemical industry. Just last year, the coal chemical industry still represented an attractive opportunity. The international crude oil price on July 11, 2008, was $147.25 per barrel, making coal prices appear very low in comparison. Coal can be used as an alternative to oil to produce various chemical products, which creates significant profit opportunities for the coal chemical industry. At the same time, China’s resource profile of abundant coal and limited oil also makes it possible for the development of the coal chemical industry. These were all important factors that led to a surge in coal chemical projects at one time. 　　According to statistics from the National Development and Reform Commission, as of May 2008, there were 30 new coal chemical projects under construction in China, with a total investment of over 80 billion yuan. The additional production capacity these projects would generate was 8.5 million tons of methanol, 900,000 tons of dimethyl ether, 1 million tons of olefins, and 1.24 million tons of coal-derived oil. The registered production capacity for these projects is 34 million tons for methanol, 3 million tons for olefins, and 3 million tons for coal-to-oil. 　　According to incomplete statistics, 34 listed companies have coal chemical projects under construction or planned for construction, with total expenditures exceeding 400 billion yuan. 　　With the sharp drop in oil prices, the myth of prosperity in the coal chemical industry is fading, and the profitability of related projects is a cause for concern. Gu Zongqin, vice president of the China Petroleum and Chemical Industry Association, said that the investment in coal chemical industry is much higher than that in oil refining and petrochemicals; the investment in coal liquefaction projects is more than five times that of oil refining projects. According to preliminary estimates, the investment cost per ton for methanol production facilities (excluding peripheral works) is 2,700–3,200 yuan/ton; the cost for dimethyl ether production is 3,000–3,500 yuan/ton. The investment cost for direct coal liquefaction is 7,000–8,000 yuan/ton, while that for indirect coal liquefaction is 9,000–10,000 yuan/ton. 　　At the same time, to support the construction of coal chemical projects, significant investment in infrastructure is required locally, including adequate transportation facilities, sufficient water resources, flat land, and sound environmental protection systems. The return on investment for coal chemical projects is relatively low. 　　Xu Zhengang, director of the Beijing Coal Chemicals Research Institute under the China National Coal Science and Technology Research Institute, said that based on calculations from the first half of this year, the break-even point for the coal chemicals industry is at a oil price of $40 to $50 per barrel. However, at present, oil prices, coal prices, as well as the prices of steel and mechanical equipment are all falling, which has disrupted the calculation system and made it impossible to determine the current costs of coal chemical industry operations. Moreover, to develop the coal chemical industry, enterprises must meet eight requirements: \"four hard and four soft\" conditions – coal, water, land, and transportation constitute the hard conditions, while capital, talent, policies, and technology represent the soft conditions. Among these, there is a severe shortage of specialized talent in the coal chemical industry; among the physical requirements, transportation conditions are the most critical issue, as pipeline transportation is the only option available at present. 　　Industry experts say that, based on a coal price of 400 yuan per ton, along with depreciation of fixed assets over 20 years and an interest cost of 7%, the factory output cost for coal-to-oil production corresponds to an oil price of around 60 dollars per barrel. 　　Significant breakthroughs are urgently needed in subsequent application technologies. At present, coal gasification technology remains a bottleneck in the development of large-scale coal chemical industries in China. Methanol is the main product of coal gasification, and it can be used to produce downstream products such as dimethyl ether, olefins, formaldehyde, acetic acid, and polyethylene. In the recent months, the price of methanol has dropped from over 4,900 yuan per ton to nearly 2,000 yuan. Not only that, but due to the financial crisis, global markets are currently performing poorly. **Hou Shiguo, deputy director of the Industrial Policy Department of the Ministry of Industry and Information Technology, pointed out that in China, industries such as calcium carbide, coal-based methanol, coal-based dimethyl ether, and coke currently show a trend where production capacity exceeds demand. 　　It is understood that by the end of 2007, China’s calcium carbide production was around 15 million tons, while its production capacity reached approximately 25 million tons per year ； China’s methanol production exceeds 10 million tons, with an annual capacity of 30 million tons ； The dimethyl ether production volume is 900,000 tons, with a production capacity of over 4 million tons. 　　At present, the development of coal chemical industry in our country still faces a series of problems. For example, the structure is unreasonable, with a large number of small and medium-sized enterprises in the industry, and few large-scale, modern, high-tech enterprises ； There are too many projects; all the major coal-producing provinces are competing to launch coal chemical projects, resulting in similar trends in this industry ； The added value of the products is low, and the subsequent application technologies for these products have not kept up. Hou Shiguo analyzed that due to the incomplete development of subsequent application technologies, the production capacity in some sub-sectors has far exceeded downstream demand. In response to this, **on the one hand, there is an expectation for improvements in the utilization technologies in the downstream sectors of the coal-to-oil industry; on the other hand, higher entry standards have been set for these industries, along with policies aimed at phasing out outdated production capacity. For example, coke ovens with a capacity of less than 600,000 tons and a height of less than 4.3 meters will be phased out over the next few years, as will calcium carbide furnaces with a production capacity of less than 25,000 tons. 　　The policy plans for industrial development are not yet clear. In response to the reckless investment and redundant construction in the coal chemical industry, the **National Development and Reform Commission halted coal-to-oil projects for the third time in September 2008: all such projects except for two pilot projects were to be stopped. 　　Hou Shiguo believes that due to a series of problems existing in China’s coal-to-oil projects at present, such as huge investment in production facilities, unproven technical reliability, energy loss of around 50%, the absence of any successful cases, and high water consumption, **strict control measures have been implemented in terms of policy. However, the successful trial operation of the Shenhua coal direct liquefaction project on January 7 this year marked a significant breakthrough in independent innovation and industrialization in China’s coal chemical industry. However, the economic viability and stability of this project still require further observation. Shenhua Coal-to-Oil Chemical Co., Ltd., which is responsible for implementing this project, will next focus on maintaining the continuous and stable operation of the plant, as well as promptly resolving any issues that arise during the operation of various units, in order to achieve stable operation over longer periods of time as soon as possible. 　　Due to the imperfections in current coal chemical technology and related application technologies, there is significant disagreement among industry experts, and no consensus can be reached. Although the \"Development Policy for the Coal Chemical Industry\" and the \"Medium- to Long-Term Development Plan for the Coal Chemical Industry\" have been formulated, they have not yet been officially released. 　　Companies are preparing to embrace the new economic cycle. Enterprises that operate coal chemical projects on a long-term basis, or large companies involved in such projects, believe that the coal chemical industry needs to focus on developing its core competitive strengths in order to face the arrival of the new economic cycle. 　　Zhang Minglin, vice general manager of Yankuang Group and general manager of Yankuang Group’s coal-to-oil company, told a reporter from China Industrial News that current market fluctuations have indeed had an impact on the coal chemical industry, but he believes that the long-term trend remains unchanged. At present, Yankuang’s coal chemical projects are still in progress. It is understood that on February 3, the coal-to-oil project of Yankuang Group received approval from the Ministry of Environmental Protection, indicating that the project will be implemented in Shaanxi Province in the near future. 　　Huang Haiyan from Tianji Coal Chemical Group Co., Ltd. said in an interview with a reporter from China Industry News that the company’s main products are aniline, phosphate fertilizers, and other such items. It has been producing and selling coal chemical products for over 20 years. Since it completed its annual sales targets in the first half of 2008, sales in the second half of that year were affected by market conditions, but this had little impact on the overall annual sales performance. 　　Hua Wei, chairman of Shaanxi Coal Chemical Industry Group, said that 40% of China’s coal is high-sulfur coal, which cannot be burned directly; coal chemical processing can address this issue, and the next 20 years can still be seen as an opportunity for the development of a new type of coal chemical industry. 　　He believes that in times of market volatility, industries should place greater emphasis on developing core competitiveness. Firstly, the industry should focus on building research and development platforms for coal chemical technologies, strive to develop new technologies, and increase the contribution of these new technologies to the industry. Secondly, as an effective means of risk prevention, the industry should focus on the integration of resource development and transformation, ensuring a stable supply of upstream resources to maintain its competitive advantage in development. Furthermore, given the inverse distribution between resource availability and consumer markets in our country, the coal chemical industry should enhance research on industrial logistics to reduce costs. In the future, pipeline coal transportation will pose a challenge to traditional transport methods due to its advantages of low cost, high capacity, long distance transport, and low pollution. It is reported that Shaanxi Coal and Chemical Industry Group is preparing to build a coal transport pipeline with an annual capacity of 10 million tons of coal. 　　Expert opinion: Integrating the development of coal chemical industry with wind power. Vigorously developing the modern coal chemical industry will alleviate the shortage of oil supply in China and ensure energy security ； Thus, vigorously developing renewable energy has become an important trend in the development of China’s energy system. However, both the modern coal chemical industry and the wind power industry face problems. To this end, Ni Weidou, an academician of the Chinese Academy of Engineering and a professor at Tsinghua University, recently proposed a bold idea: an integrated system for wind power generation and coal chemical processing. 　　Since methanol and dimethyl ether are inconvenient to transport as alternative fuels, and the coal chemical industry, exemplified by methanol production, emits large amounts of carbon dioxide and consumes substantial amounts of water resources, areas in China that are rich in coal resources usually suffer from severe water shortages. Areas rich in wind energy resources are generally remote areas, far away from load centers ； Low grid capacity ； Wind power is difficult to control and schedule, and its large-scale integration into the power grid inevitably leads to grid instability ； The grid connection leads to increased complexity in wind turbine design and raises the investment costs associated with wind power, and the wind power industry faces a range of other issues as well. 　　Ni Weidou said that an integrated system of wind power generation and coal chemical industry can effectively address the aforementioned problems and has several advantages. The coal consumption for gasification remains unchanged, while the methanol production doubles; it can be utilized on-site using electricity that is difficult to control and integrate into the power grid ； Carbon dioxide emissions from methanol production have been significantly reduced, to only 10% of those in the original system ； Water consumption per ton of methanol produced has been reduced by 20%.