TBEA will use the 8 billion yuan raised to launch the Zhundong coal-to-natural gas project with an annual production capacity of 2 billion Nm³

Thread Content

It was recently reported that TBEA has disclosed a plan to issue convertible bonds. The company intends to raise 8 billion yuan through this issuance; after deducting the issuance costs, all of this funds will be invested in the Zhundong coal-to-natural gas project with an annual production capacity of 2 billion Nm³. The total investment for this project is 17.039 billion yuan. The feasibility study report indicates that the entity responsible for constructing the project funded by the proceeds is Xinjiang Zhuneng Chemical Co., Ltd., a wholly-owned subsidiary of Xinjiang Tianchi Energy Co., Ltd., which in turn is a subsidiary of TBEA. The construction will take place in the Jiangjunmiao Industrial Park within the Xinjiang Zhundong Economic and Technological Development Zone, and the project duration is 3 years. Assuming a project construction period of 3 years, operation begins in the 4th year with a production load of 80%, and full capacity is achieved by the 5th year ； The economic service life of the project is 15 years, with an income tax rate of 25%. It produces 1,214.28 million Nm³ of synthetic natural gas (SNG) and 582,672 tons of liquefied natural gas (LNG) per year. Based on a coal price of 150–160 yuan per ton (including taxes, where fuel coal costs 150 yuan per ton and raw coal costs 160 yuan per ton), the financial internal rate of return (after taxes) for this project varies between 6.54% and 11.71% depending on the sales prices of SNG/LNG. The payback period (after taxes, including the construction period) ranges from 9.13 years to 12 years. TBEA stated that the Zhundong coal-to-natural gas project with an output of 2 billion Nm³ per year plays a crucial role in ensuring **energy strategic security, promoting the clean and efficient use of coal, advancing the level of technologies for coal processing, and contributing to high-quality economic and social development; it brings significant social and economic benefits ； As an important measure to transform and make more efficient use of the company’s coal resources, the construction of this project can enhance shareholder returns, and it holds significant illustrative and leading value for the further transformation of the company’s energy business. Project construction is necessary. Specifically, the construction of this project is an important measure to implement the strategy for establishing national energy and resource security bases, to strengthen the West-East Gas Transmission Project, and to ensure **energy security. It plays a significant role in promoting the transformation and upgrading of the coal chemical industry, enhancing the efficient and clean use of coal, and achieving \"carbon peak\" and \"carbon neutrality\" goals. At the same time, it is also a necessary step for TBEA to advance the structural upgrading of its energy-related business; it offers good economic benefits and meets the strategic needs for the long-term development of the company’s core business. It is understood that the energy industry is a core business segment of TBEA, including coal mining and sales, as well as coal-based power generation. The company holds 12.6 billion tons of coal resources, with an approved coal production capacity of 74 million tons per year, and its thermal power generation capacity amounts to 5.04 million kilowatts. TBEA states that although the company has a solid reserve of coal resources, the coal industry is characterized by strong cyclicality and significant price fluctuations. By carrying out this project, the company can optimize its energy business structure, enhance the resilience of its energy operations, improve operational efficiency, and reduce operational risks. Meanwhile, the development of coal-to-gas production in our country is relatively short; in the early stages of its development, insufficient pipeline transportation capacity restricted the supply of natural gas to end-market consumers ； As the reform of the oil and gas sector continues to deepen, it creates more favorable conditions for the development of the coal-to-gas industry. According to the feasibility study report, the pipeline transportation cost from Zhundong to Shanghai is 0.7514 yuan/Nm³, while the cost from Zhundong to Beijing is 0.5973 yuan/Nm³.