Ningxia Baofeng Energy is poised to become the world’s largest producer of coal-based olefins

On October 24, 2022, the approval details for Baofeng Energy’s 500,000-ton coal-to-olefins project were amended; the adjusted total investment amount was 9,519.14 million yuan. The details are as follows: It is agreed that for Ningxia Baofeng Energy Group Co., Ltd.’s 500,000 tons per year coal-to-olefins project, the construction of an olefin separation unit with a capacity of 500,000 tons per year, a polypropylene plant with a capacity of 300,000 tons per year, and an LDPE/EVA plant with a capacity of 250,000 tons per year shall be reduced. The product plan will be adjusted from one that involves annual production of 250,000 tons of EVA or some low-density polyethylene, along with 300,000 tons of polypropylene and by-products such as propane, C4, C5, and sulfur, to one that features annual production of 260,000 tons of ethylene and 240,000 tons of propylene, with 12,400 tons of sulfur produced as a by-product ； The project investment was accordingly reduced by 3,454.02 million yuan. The adjusted total investment for the project is 9,519.14 million yuan, of which 8,975.95 million yuan is allocated to construction costs, 67.52 million yuan to working capital for the initial phase, and 475.67 million yuan to interest during the construction period. The funding comes from the enterprise’s own resources in the amount of 2,855.74 million yuan, accounting for 30% of the total investment; the remaining amount is covered through bank loans and other means. In December 2019, the third phase of Ningxia Baofeng Energy’s 500,000-ton coal-to-olefins project was launched. The project was planned at that time to include the construction of a 1.5 million tons per year coal gasification methanol production facility (4 units in operation and 2 as backups), a 500,000 tons per year methanol-to-olefins facility, a 250,000 tons per year ethylene-vinyl acetate copolymer (EVA) facility, a 300,000 tons per year polypropylene facility, along with the necessary utility systems and auxiliary facilities. Upon completion and reaching full capacity, the project will primarily have an annual production capacity of 250,000 tons of EVA, or some amount of low-density polyethylene, as well as 300,000 tons of polypropylene; in addition, it will be able to produce by-products such as propane, C4, C5, and sulfur. The coal required for the project is obtained by the project owner through market-based procurement. The project is located in Area A of the Linhe Comprehensive Project Zone in the Ningdong Energy and Chemical Industry Base. The total investment for the project is 1,377,000 million yuan, of which 1,298,201 million yuan is allocated to construction costs, 9,991 million yuan to working capital for the initial phase, and 68,808 million yuan to interest during the construction period. The funding comes from the enterprise’s own funds in the amount of 413.1 million yuan, accounting for 30% of the total investment, with the remaining amount being covered through bank loans and other sources. The project builds on the enterprise’s existing engineering expertise in gasification processes; it utilizes Beijing Aerospace’s pressurized coal gasification technology, Linde’s technology for low-temperature methanol washing, and the first-generation technology developed by the Dalian Institute of Chemical Physics under the Chinese Academy of Sciences (a capacity of 500,000 tons per year per system) ； Olefin separation utilizes technology from the American company KBR ； The polypropylene PP plant uses the Lyondellbasell gas-phase process, while the EVA plant employs the Basel high-pressure tubular process ； Sulfur recovery employs a process that includes high-temperature Claus reaction in the furnace, two-stage low-temperature catalytic Claus reaction, hydrogen reduction, and selective oxidation; after combustion of the exhaust gases, they are sent to the power island in the Linhe Industrial Park (where they enter two desulfurization systems in the power station).

Baofeng Energy’s 500,000 tons per year olefin project includes a high-capacity production facility of 250,000 tons per year for EVA; this product is widely used in areas such as foam materials, wires and cables, functional greenhouse films, and photovoltaic encapsulation films. Currently, the domestic reliance on imported EVA products is as high as 60%. Once the project is put into operation, the 250,000 tons per year production facility will also set a new record for the scale of single EVA production units in the western region, further enhancing its core competitiveness in terms of scale and high-end capabilities. Ningxia Baofeng Energy Group has completed two phases of its olefin projects, with an annual production capacity of 1.2 million tons of olefins, 600,000 tons of polyethylene, and 600,000 tons of polypropylene. Upon completion of the third-phase project, an additional 500,000 tons per year of olefin production capacity will be added, resulting in 250,000 tons per year of EVA and 300,000 tons per year of polypropylene products. In September 2020, the 500,000 tons per year olefin production project and the 500,000 tons per year C2-C5 comprehensive utilization project for olefin production at Ningxia Baofeng Energy Group Co., Ltd. commenced construction. The completion of these projects is scheduled for 2022, and once finished they will nearly double Baofeng Energy’s polyolefin production capacity, generating additional annual sales revenue of over 8 billion yuan. It is understood that once completed, this project will add 1 million tons of polyolefin production capacity per year, raising Baofeng Energy’s annual polyolefin production capacity to 2.2 million tons and its annual methanol production capacity to 6.4 million tons. The advantages of integration and scale will become even more prominent, and the company’s position as a leader in high-end coal-based new materials will grow stronger. Among them, the 500,000 tons per year C2-C5 comprehensive utilization project for olefin production uses C2-C5 compounds, methane, and other by-products from Baofeng Energy’s first, second, and third phases of coal-to-olefins production as raw materials to \"transform\" them into high-end polyolefin products. The 500,000 tons per year olefins project includes a high-end production capacity of 250,000 tons per year for EVA, with the aim of filling the gap in domestic supply of high-end chemical products. As one of the higher-end products among plastics, EVA products are widely used in fields such as wires and cables, foamed shoe materials, functional greenhouse films, photovoltaic encapsulation films, hot melt adhesives, and toys, with a degree of external dependence of 60%.