Danhua Bets on Coal-Based MEG Project     

Danhua Chemical Technology Co., Ltd. (Danhua, SH: 600844) said on July 17th it has signed a framework agreement with Shanghai-based ShareWin Enterprise Investment Co., Ltd., Tongliao Jinmei Chemical Co., Ltd. and Henan Coal Chemical Group Co., Ltd. in Zhengzhou city, Henan province, to develop coal-based mono-ethylene glycol (MEG).
   They share a strategic goal of integrating respective company's advantages in industry resources and technology to develop the coal-based MEG business. They aim to have an annual production capacity of 3 million tons in five to six years, becoming one of the world's largest MEG producers and taking up a domestic market share of between 35% and 40%. They will also develop other coal-based chemical businesses.
    Henan Coal Chemical Group has agreed to acquire RMB800 million worth of Danhua's shares via a private share placement and hold them for long term. Danhua also agreed to use all the net proceeds from the issuance to fund the construction of the second phase of the 400 000 t/a MEG project in Tongliao Jinmei. Construction on the first phase of 200 000 t/a began in 2007 and will be completed in the second half this year. Tongliao Jinmei plans to build a 1.2 million t/a MEG manufacturing base.
   In addition, the four also agreed to co-operate in building a 600 000 t/a coal-to-chemicals project in Tongliao, while Henan Coal Chemical and Tongliao Jinmei will form an equally-owned joint venture to build MEG and acetic anhydride projects in Luoyang and Yongcheng, Henan province (CCR2007 No.19).