Modern Coal Chemical Sector’s Scale Growing despite Adversity

By Sang Jianxin, China National Chemical Information Centre

Many coal chemical project impact assessments accepted in 2016

In 2014, only one coal chemical project presented an acceptable environmental impact assessment, according to incomplete statistics. Then, in 2015, the Ministry of Environmental Protection tightened the environmental impact criteria for new coal chemical projects, and no assessments were approved.
In 2016, the environmental impact assessment reports of four coal-to-gas projects were approved, involving a total capacity of 14.0 billion m3/a, and these projects included a 4.0 billion m3/a project of CNOOC in Datong of Shanxi province, a 4.0 billion m3/a project of Inner Mongolia Beijing Enterprises Jingtai Energy Development Co., Ltd., the 4.0 billion m3/a project of Suxin Energy Hefeng Co., Ltd. and a 2.0 billion m3/a project of Yili Xintian Coal Chemical Co., Ltd. The environmental impact assessments of two coal-to-oil projects were approved, involving a total capacity of 3.8 million t/a; the two projects were Shanxi Lu’an Mining (Group) Co., Ltd.’s integrated oil-chemical-electricity demonstration project for clean utilization of 1.8 million t/a high-sulfur coal and a 2.0 million t/a indirect-liquefaction coal-to-oil project of Inner Mongolia Yitai Coal Co., Ltd. in Zhungeer of Inner Mongolia. At the same time, in November 2016, the National Development and Reform Commission (NDRC) accepted Yitai Yili Energy Co., Ltd.’s 1.0 million t/a coal-to-oil demonstration project.
In 2016, five projects including a 300 kt/a coal-to-ethylene glycol (EG) project of Shaanxi Weihe Binzhou Chemical Co., Ltd. of Shaanxi Weihe Coal and Chemical Group Co., Ltd. and a 250 kt/a coal-to-EG project of Ningxia Donglai Energy Chemical Co., Ltd. passed the environmental impact assessment in 2016, involving a total capacity of 1.3 million t/a.
In July 2016, the environmental impact assessment report of an 800 kt/a coal-to-polyolefin project to be jointly built by China Power Investment Corporation and Total was approved. An 800 kt/a calcium carbide acetylene-method polyethylene (PE) chemical cogeneration project (including 400 kt/a PE capacity) of Baotou Shenwu Coal Chemical Technology Co., Ltd. was formally approved by the Baotou Environmental Protection Bureau in November 2016.
In addition, many coal chemical plants were completed and put into operation in 2016 – coal-to-EG, coal-to-polyolefin, coal-to-olefin, coal-to-methanol, indirect-liquefaction coal-to-oil, etc. However, no coal-to-gas or coal-to-aromatics plants were completed and put into operation in 2016.

Profitability of coal-to-olefins was prominent

According to midyear reports released by China Shenhua Energy Co., Ltd., covering the first half of 2016, the output of PE and polypropylene (PP) in Shenhua Baotou’s 600 kt/a coal-to-olefin plant was 130.2 kt and 124.3 kt, respectively, and the company’s business revenue was RMB1.934 billion, and the profit was RMB176 million. In the first half of 2016, the output of polyolefins in the 600 kt/a coal-to-olefin plant in Zhongmei Yulin Energy Chemical Co., Ltd. of Shaanxi Yanchang Petroleum (Group) Co., Ltd. was 571.3 kt, accomplishing 57.13% of the annual plan, and the company’s business revenue was RMB4.712 billion and the profit was RMB525 million. According to the report, in the first three quarters of 2016, the output of PE and PP in the 600 kt/a DMTO (dimethyl ether or methanol-to-olefin) plant in Yuheng Coal Chemical Co., Ltd. of China National Coal Group reached 269 kt and 261 kt, respectively, the operating rate of the unit continued to exceed 100%, and the profit achieved by the DMTO project would not be lower than RMB1.0 billion in 2016. In addition, many coal-to-olefin plants like the coal-to-olefin plants of Shandong Shenda Chemical Industry Co., Ltd. and Ningxia Baofeng Energy Group Co., Ltd., and the methanol-to-propylene (MTP) plant of Ningdong Energy Chemical Base of Shenhua Ningmei Group achieved good results under the difficult situation of low oil prices and rising coal prices.

Coal-to-oil: poor profitability under heavy taxes

In 2016, in addition to pressures from coal and oil prices, the profit of coal-to-oil was squeezed by high taxes. In 2014, the Ministry of Finance raised the consumption tax on oil products three times, increasing the tax burden of coal-to-oil enterprises. In 2015, the consumption taxes paid by coal-to-oil enterprises rose by 50% compared with taxes in 2013.
According to midyear reports of Inner Mongolia Yitai Coal Co., Ltd., the firm’s most profitable coal-to-oil plant of 2015, the company’s 160 kt/a coal indirect-liquefaction demonstration plant operated steadily in the first half of 2016, producing 91.8 kt of oil products and other chemicals and earning business revenue of RMB346 million. However, its net profit was -RMB20.6 million. According to another report, the entire coal based oil sector suffered losses. In the first ten months of 2016, financial performance was barely satisfactory for Shenhua’s 1.08 million t/a coal direct-liquefaction and 180 kt/a coal indirect-liquefaction plant, the 1.0 million t/a coal indirect-liquefaction plant of Yankuang Shaanxi Future Energy Chemical Co., Ltd., Shenmu Tianyuan Chemical Co., Ltd.’s 500 kt/a coal tar plant, the 100 kt/a coal-syngas-methanol-mixed aromatics plant of Shaanxi Baodan Chemical Group, and China Kingho Group’s coal tar hydrogenation and coal-syngas-methanol-mixed aromatics plant.

Coal-to-EG: stable operation

Coal-to-EG units generally operated well in 2016. Yangmei Group Shenzhou Chemical Co., Ltd. started up a plant in April 2016 using WHB coal-to-polymerization-grade-EG technology and achieved stable operation at high operating rates of 90%-100%. In late November, the company achieved stable operation at 110% overload, and the single-line output was 330 tons per day.
The 200 kt/a coal-to-EG unit in Anyang Yongjin Chemical Co., Ltd. of Henan Coal Industry Group using the technology from Danhua Chemical Technology Co., Ltd. operated steadily in 2016. In 2016, using its own technology, Shandong Hualu Hengsheng Chemical Co., Ltd. conducted comprehensive research such as transformation of its 50 kt/a coal based syngas-to-EG unit, optimizing the process and improving the catalyst, and the excellent rate of EG product reached 100%.
In the past, the quality of EG made from coal could not meet the standards of polyester makers, so coal-to-EG plants could supply low-end markets such as resin producers (accounting for 10% of EG’s downstream market) and antifreeze makers. However, after technical improvements, the quality of EG from the above three producers reached the standard, and their products have been widely used in making products such as bottle flake polyester chips, filaments and polyester staple fiber.

Coal-to-natural gas: improvement of stability

China’s main coal-to-natural gas projects are Datang International Keshiketeng Coal Gas Co., Ltd.’s 1.35 billion m3/a project and Inner Mongolia Huineng Group’s 400 million m3/a project. In 2014, China’s output from coal-to-gas was 790 million m3, and the overall operating rate was only 45%. In 2016, the operation of coal-to-gas plants was more and more stable, and operating rates increased significantly. In the first 7 months of 2016, coal-to-natural gas output reached 820 million m3, up 21.1% YoY, according to the National Bureau of Statistics of China. It is estimated that the output for the whole year of 2016 was 1.4 billion - 1.5 billion m3, and the average operating rate was, conservatively, over 80%.

Coal-to-aromatics: still under construction

The preparatory work of China Huadian Corporation’s 1.0 million t/a coal based methanol-to-aromatics industrial demonstration project in Yulin of Shaanxi province has been carried out smoothly. The process package of the core methanol-to-aromatics unit has been jointly developed by China Huadian Corporation, Tsinghua University and PetroChina East China Design Institute.

Projection in 2017

According to the progress of modern coal chemical projects, the coal chemical sector will still be in the peak of capacity expansion in 2017. In November 2016, Inner Mongolia Connell Chemical Industry Co., Ltd. completed 95% of construction work on its 300 kt/a coal-to-EG project. The two 200 kt/a coal-to-EG units in Puyang Yongjin and Yongcheng are planned to be put into operation once again in the near future.
On October 1, 2016, Qinghai Salt Lake Industry Group Co., Ltd. started wet commissioning on the methanol gasification furnace of 330 kt/a methanol-to-olefin project, which is a part of the Qinghai Salt Lake Metal Magnesium Integration Project. Construction of Connell Chemical Industry Co., Ltd.’s first phase 300 kt/a methanol-to-olefin project started in July 2016, equipment installation of the project was formally under way in November 2016, and the plant is planned to be completed and put into operation in October 2017.
Shenhua Ningmei Coal Chemical Co., Ltd., Inner Mongolia Fenghui Chemical Co., Ltd. and Inner Mongolia Yigao Coal Chemical Technology Co., Ltd. are all building coal chemical plants that are expected to go into operation in 2017, and the total newly added capacity will reach 4.34 million t/a. In addition, the new 1.2 million t/a coal-to-fine chemicals plant of Yitai Group in Hanggin Banner, Erdos of Inner Mongolia produced by-products in October 2016, and is planned to produce qualified products in the first half of 2017. More than 80% of construction work on Datang International Keshiketeng Coal Gas Co., Ltd.’s second phase 135 kt/a coal-to-gas project has been completed, and the plant is hoped to go into operation in 2017.