SHENHUA Group Corp has signed an agreement with Dow Chemical Co for a detailed, two-year feasibility study that could lead to construction of a world-scale coal-to-chemicals complex in China's north.

The project, using the US-based chemical maker's technology and located in Shaanxi Province, would convert coal to methanol to produce ethylene and propylene, the building blocks for a variety of plastics and chemical products, according to a joint statement released late Monday from the United States.

The two companies have been working on a preliminary feasibility study for the project, which would cost billions of US dollars. The detailed feasibility study will evaluate environmental impact, water supply, engineering design, market and product mix, logistics and economics.

Upon completion of the study, Shenhua and Dow would compile a project application report, which they would then submit to the Chinese government for approval.

"The success of this project will prove a new and viable way for China to produce chemical products from its indigenous coal and salt resources, which will help China reduce its reliance on imported oil and maintain sustainable economic growth," the statement said.

China, rich in coal, imported nearly half of its oil needs last year and also relied on imports for a large portion of its basic chemicals.

Chen Biting, chairman of Shenhua, China's biggest coal producer, said the project would create a commercially competitive industry that would advance local economic growth. "It is of great significance for the world - and for China in particular - to produce oil substitutes converted from coal," Chen said.

Source:佚名