China's Shenhua plans R24bn project with Sasol
March 23, 2004
busrep.co.za
By Bloomberg
Beijing - Shenhua Group, China's biggest coal miner, which is planning a 30 billion yuan (R24.24 billion) joint venture with Sasol, said at the weekend the first phase of the plant would have a capacity of 3 million tons of petrol and diesel a year.
The fuel-from-coal plant, to be built in Shaanxi province, will be the second in China. The first, being built in Inner Mongolia, will start up in 2007.
Wen Xinsheng, the deputy general manager of Shenhua's coal-to-oil division, said last week the plant would use Sasol's indirect liquefaction process that first produced gas from coal and then converted the gas to liquid fuels. Construction of the plant had not started yet, he said.
Shenhua planned to double its coal output to 200 million tons of coal by 2010, Zhang Yuzhuo, the vice-president of Shenhua Group said at the Coaltrans China conference in Shanghai.
Last year, coal production rose 29 percent to 100 million tons.
Shenhua plans to produce 30 million tons a year of liquid fuels from coal by 2020, easing China's reliance on crude oil imports, which surged 60 percent to a record last month.
"We plan to boost oil capacity to 10 million tons by 2010," Zhang said, adding that the company planned to adopt technology used by companies such as Sasol.
Shenhua's technology to make liquid fuels from coal was profitable as the cost of converting coal to oil was $10 (R65.80) a barrel less than the $28 a barrel in the US, Zhang said. He did not say where he obtained the information about costs in the US.
He could not give details about funding for the project because it was related to the company's plan for an initial share sale.
The company said earlier this month it planned to raise more than $1 billion through a share sale in Hong Kong and New York by March next year.
Shenhua was also in talks with the Royal Dutch/Shell Group and companies in Denmark and the US about using their technology, he said.
Shenhua was pursuing the venture with Sasol because the process also allowed for the manufacture of chemicals that were in demand.
"Our production costs will be lower than Sasol's because our coal mining and labour costs are lower," he said. The quality of the coal that would be used was better than the coal used by Sasol.
Shenhua had 220 billion tons in coal reserves in Erdos Basin in Inner Mongolia, Zhang said. |
