Shandong Province to Get $400 Million Coal-Chemical Base

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Researched by Industrial Info Resources (Sugar Land, Texas)--A $400 million coal-chemical base is planned to be built in Zoucheng in eastern China's Shandong Province with an annual production capacity of 2 million tons of coke and 200,000 tons of methanol.

Environmental assessment, land and corporate registration and other procedures for the project have been finished, a local government official said. He also confirmed that more funds will be put into the project.

The project is co-funded by Jiangsu Shagang Group, China's largest private steel company headquartered in eastern China's Jiangsu Province, and Hengxin Group, a coke producer in Jining in Shandong.

Zoucheng has a vast coal reserve of about 300 square meters with more than 4.1 billion tons of coal reserves. There are several electric power plants in the area, so Zoucheng can produce about 30 million tons of raw coal every year. Yankuang Group, one of the largest coal corporations in China, is based in Zoucheng.

Shandong Hengxin Group is also a private corporation with its main business in coal washing, coal coking and coal chemicals production.

Privately owned Shagang Steel Group ranked the fourth in steel industry in 2006 with an annual output of 14.6 million tons of steel. In the same year, it beat other competitors as a purchaser of Jiangsu Huaigang Steel Corporation with a 64.4% share, or $266.5 million.

With another $266.5 million, Shagang Steel purchased another private steel company -- the largest in northern China's Shanxi Province -- this year.

Large-scale production of cokes, a type of main materials for producing steel, remains fundamental for Shagang's business. Its head also confirmed that in order to better integrate steel production with upstream material supplies, they have made further steps in coke production area.

Together with the coke project, there's another project underway by Shagang Group to consolidate materials supplies. An iron ore field in Australia is under negotiation for purchasing. It's estimated to have 283 million tons of iron reserves, with exploration potential until 2021. It's reported that Shagang will put more than $100 million into the project.

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