U.S. Firm Invests in Coal-Chemical Project in China

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Researched by Industrial Info Resources (Sugar Land, Texas)--A U.S. company is considering investing more than $1 billion to develop the coal-chemical business in China's northeast region. Synthesis Energy Systems Incorporated (NASDAQ:SYMX) (SES) (Houston, Texas), an energy and technology company focusing on China, has negotiated with the local government of the Inner Mongolia Autonomous Region, planning to earmark $1.3 billion in a large-scale coal-chemical project in the coal-rich region.

Lorenzo Lamadrid, Chairman of SES, recently paid a visit to China, where the investor plans to build a 2.4-million-ton-per-year methanol plant and a 1.6-million-ton-per-year dimethyl carbinol project, finishing them in three phases, according to China's official Xinhua News Agency.

SES plans to set the project in the Economic and Technology Development Zone of Xing'an Prefecture, which is rich in coal and various non-ferrous metals. The local government has suggested that SES pay more attention to China's existing coal-chemical industry and choose a Chinese company with which to cooperate.

In March, SES announced a similar project in cooperation with Yima Coal Group (Yima City, Henan) in China's central Henan province . With the U-GAS technique, the Henan project features reduced costs and lower emissions.

By the end of 2008, another SES project in Inner Mongolia will be ready to run. This project, started in June 2006, includes a 22,500-ton-per-year methanol unit and a 150,000-ton-per-year dimethyl ether unit, in cooperation with a local company.

Recent reports show that around $60 billion are planned to be invested in the coal-chemical industry, with more than 30 large-scale companies in the field. However, when oil prices fall, the profit margin for coal-related business diminishes at a fast pace.

China's National Development and Reform Commission issued a notice this summer, banning all except two coal-to-oil projects. One of these projects is being constructed by South African company Sasol (NYSE:SSL) (Johannesburg). Other coal-chemical projects are not affected.

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