Progress of coal chemical projects in Ordos City, Inner Mongolia

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I. Overall progress of projects: The projects currently under construction include: the first phase of Yanzhou Coal Industry Ordos Energy Chemical Co., Ltd.’s project to produce 1 million tons of methanol per year, as part of a total production capacity of 1.8 million tons; Inner Mongolia Tianrun Fertilizer Co., Ltd.’s urea/synthetic ammonia project; Donghua Energy Company’s coal-to-methanol project; Kailuan Group’s circular economy project involving the production of ethylene glycol from syngas and coal tar hydrogenation; Yidong Group’s calcium carbide project; HuiNeng Company’s coal-to-natural gas project; Shilin Coal Chemical Co., Ltd.’s first phase project to produce 300,000 tons of methanol per year; Inner Mongolia Mengda New Energy Chemical Base Development Co., Ltd.’s project to produce 600,000 tons of methanol; ZhuoZheng Coal Chemical Co., Ltd.’s first phase project to produce 1.2 million tons of methanol per year; Ordos Jinchengtai Chemical Co., Ltd.’s first phase project to produce 600,000 tons of methanol per year; Ordos Group’s project to produce 4.8 million tons of green injection materials and 480,000 tons of tar hydrogenated products; and Inner Mongolia Boda Chemical Co., Ltd.’s project to produce 1 million tons of synthetic ammonia, 1 million tons of urea, and 1.2 million tons of caustic soda. There are also three projects that are still under construction: the methanol project of Ordos Northwest Energy and Chemical Co., Ltd., the 1.2 million tons of carbonized coal/239,000 tons of methanol project of Ordos Rongcheng Energy and Chemical Co., Ltd., and the methanol project of Shanghai Huisheng Group. These projects have not resumed operations due to issues such as land availability, funding, and resource allocation. New projects include: the methanol project of Ordos Menghua Energy Co., Ltd.; the project of Inner Mongolia Jianfeng Coal Chemical Co., Ltd. (Shaanxi Coal Group) to produce 1.6 billion cubic meters of coal-based syngas per year, as well as 200,000 tons of ethylene glycol and various downstream processed products; and the project of China National Coal Energy Group Corporation to produce 2 million tons of synthetic ammonia and 3.5 million tons of urea. II. Problems Existing in Project Construction —— Land use quota issues. In 2011, there were 52 projects in our city that involved further construction or new construction without the necessary land permits, requiring a total of 7,487 hectares of land. At present, the land use quota of 2,642 hectares that has been submitted to the Autonomous Region Land and Resources Bureau for implementation is in place, with a shortfall of 4,845 hectares. 　　——The issue of environmental capacity. All the mandatory emission targets assigned to our city by the autonomous region, such as those for sulfur dioxide and chemical oxygen demand, have been used up, and this has become the biggest constraint on new projects in our city going forward. 　　——The issue of water usage indicators. A total of 586 million cubic meters of industrial water has been allocated across the city (with 230 million cubic meters actually used in 2010); currently, only 34 million cubic meters of water quota remain unallocated (20 million cubic meters from surface water in the Wu Ding River, and 14 million cubic meters from water rights exchanges). To date, enterprises have applied for more than 500 million cubic meters of water quota, of which 150 million cubic meters relate to water needs for projects that are still under construction and have not yet been met. 　　——Funding issues. In 2011, the 14 industrial parks in the city planned to invest 13 billion yuan in infrastructure, and the 4 billion yuan that has been invested so far was largely financed by the construction contractors themselves. Furthermore, as the bank loan reserve requirement ratio continues to rise, it has become difficult to finance certain key projects, resulting in slow progress on these projects. ——Approval issues. The coal chemical industry, which is a key focus for development in our city, as well as various industrial projects that are set to be launched in the near future, such as those related to electrolytic aluminum, polysilicon, special steel, PVC produced by the calcium carbide method, and the automotive industry, all fall under the category of industries whose development is restricted; as a result, it becomes more difficult to obtain approval for such projects.