Shanxi Lu’an Chemical Co., Ltd. was officially established: aiming to become a world-class high-end chemical enterprise
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On February 28, Lu’an Group officially announced that Shanxi Lu’an Chemical Co., Ltd. was established in the **-level high-tech industrial development zone in Changzhi City, with an inauguration ceremony held there. Luan Group stated that it will use this company as a platform to make a series of significant breakthroughs in the development of new types of high-end modern coal chemical industries. By leveraging its unique advantages in building a high-end, open, and innovative system consisting of \"one center, seven platforms, and five bases,\" the group aims to foster world-class high-end chemical enterprises with global competitiveness. As is well known, Lu’an Group, one of the seven major coal enterprises in China, has been committed to transitioning toward clean energy in recent years, putting significant effort into coal-to-oil projects. The results of this effort have been evident, with the company achieving numerous firsts. In 2017, the company completed and put into operation a demonstration project for the integrated utilization of high-sulfur coal for oil, chemicals, electricity, and heat production, with an annual capacity of 1.8 million tons. This project, the result of six years of hard work and substantial investment, represented a major breakthrough for Lu’an Group in the development of advanced modern coal chemical industries.
In 2017, in line with the strategic plans set by the provincial Party committee and government, and taking into account the characteristics of its resource-based economy, Lu’an Group focused on pursuing high-end and comprehensive transformation in order to overcome the challenges faced by the coal chemical industry across the province. It formulated an implementation plan for establishing Lu’an Chemical (Group) Company aimed at transforming and upgrading the industry as well as fostering the development of high-end coal chemical products, and this plan was approved by the Shanxi State-owned Assets Supervision and Administration Commission. According to the business registration information, Shanxi Lu’an Chemical Co., Ltd. was registered on February 14, 2018, with a registered capital of 1 billion yuan. It is a wholly-owned subsidiary of Lu’an Group. The chairman of Shanxi Lu’an Chemical Co., Ltd. is a member of the Party Committee of Lu’an Group, while Wang Guangbiao serves as the vice chairman; Liu Junyi, who is also a deputy general manager of Lu’an Group, holds the position of general manager. Regarding Shanxi Lu’an Chemical Co., Ltd., Li Jinping, chairman and party secretary of the Lu’an Group, said that Lu’an has made a series of significant breakthroughs in the development of new types of high-end modern coal chemical products; it has identified five different approaches for the development of high-end fine chemicals, and several of its products have broken international monopolies and filled gaps in the domestic market. Led by the establishment of the province’s only **coal-based synthetic engineering technology research center**, a high-end open innovation system comprising \"one center, seven platforms, and five bases\" has been developed, enabling the cultivation of a large number of highly qualified and professional professionals in the field of coal chemical engineering. In the future, Shanxi Lu’an Chemical Co., Ltd. aims to attract strategic investors and fund companies in order to achieve a successful listing by the end of the 13th Five-Year Plan period and the beginning of the 14th Five-Year Plan period ； By the end of the 14th Five-Year Plan period, the chemical industry will account for an even larger share of Lu’an Group’s real economy. The momentum generated by coal production will continue to be transformed into new driving forces for the chemical sector, with fine chemicals, biochemicals, polymer chemicals, materials chemistry, and technology export playing a key role in this industry. The goal is to establish a world-class, high-end chemical enterprise with global competitiveness. Furthermore, the State-owned Assets Supervision and Administration Commission of Shanxi Province specified that, as part of the professional restructurings to be pursued in 2018, the professional reorganization of the high-end modern coal chemical industry was to be completed; however, it was not clearly stated who would take the lead in this process. It is worth paying attention to whether Shanxi Lu’an Chemical Co., Ltd., established this time, will play a key role in any future restructurings.
What is the relationship between Shanxi Lu’an Chemical Co., Ltd. and Shanxi Lu’an Coal-based Clean Energy Co., Ltd.? Father and son or brothers?
It seems that Lu’an Group is using Shanxi Lu’an Chemical Co., Ltd. to integrate its coal chemical companies. An even better outcome would be for the Provincial State-owned Assets Supervision and Administration Commission to take charge of integrating the state-owned chemical enterprises in the province, thereby creating a chemical group company with unified planning and management – this has a very bright future ahead!
In terms of total assets, management scale, and output value, Shanxi Lu’an Chemical Co., Ltd. is not comparable to Shanxi Lu’an Coal-based Clean Energy Co., Ltd. in the short term.
Xiluan Mining (Group) Co., Ltd. is one of the seven major coal enterprise groups under the jurisdiction of Shanxi Province; it is an energy enterprise group that relies on coal as its foundation while pursuing diversified development. By the end of 2013, Lu’an Group had a total of 78 subsidiary companies, of which 56 were wholly-owned subsidiaries and 22 were jointly-owned subsidiaries ； Total assets amount to 152.3 billion yuan. In 2013, coal production amounted to 88.78 million tons; the annual operating revenue was 198.79 billion yuan, the industrial added value was 38.2 billion yuan, and the profit was 607 million yuan. Currently, it ranks 372nd among the world’s top 500 companies and 8th among China’s top 100 coal enterprises. Luan An Coal-based Clean Energy Co., Ltd. is a subsidiary of Luan An Group, responsible for building the 1.8 million tons per year demonstration project for the clean utilization of high-sulfur coal for oil, chemicals, electricity, and heat production in Shanxi Luan An. This project is a key initiative under the 12th Five-Year Plan and represents a major model for transformation in Shanxi Province. Characterized by \"high-end development, full circulation, and multiple product outputs\", as well as \"technological innovation plus business model innovation\", it will become the world’s first circular economy park that integrates advanced technology, features high efficiency, offers high-quality outputs, and is low in carbon emissions, water consumption, and energy use – essentially meeting the criteria of \"three highs and three lows\". The project is located in Xiangyuan County, Changzhi City, Shanxi Province, covering an area of 5,100 mu. The project’s construction scope mainly includes a 1 million tons per year iron-based slurry-bed F-T synthesis and oil processing facility, an 800,000 tons per year cobalt-based fixed-bed synthesis oil and chemical refining facility for which Lu’an Group holds independent intellectual property rights, a 115 MW waste heat power generation unit, and a dedicated railway line.
Revenue is around 200 billion, while profits amount to only 600 million, giving a profit margin of 0.3%. It’s better to put it in a bank financial product.
Profit margin cannot be calculated in this way; return on assets should be used instead