China May Spend $10 Bln to Turn Coal Into Diesel, Other Fuels
Nov. 22 (Bloomberg) -- China, the world's largest coal producer and user, plans to spend $10 billion over the next decade on plants that turn coal into motor fuel, as the government struggles to contain a ballooning oil import bill.
Shenhua Group Corp., China's largest coal producer, and Ningxia Coal Industry Co. signed separate contracts with Royal Dutch/Shell Group. and Sasol Ltd. to study building coal-to- liquids plants. The projects would cost 60 billion yuan ($7.2 billion), said Lei Xiangqing, an official at Shenhua, which is already building a 24.5 billion yuan plant in Inner Mongolia.
China, which sits on 12 percent of the world's coal reserves, is failing to find enough oil to keep up with demand. Coal-to-fuels plants may help meet the shortfall while curbing the pollution that comes from burning 1.4 billion tons of coal a year.
``The country has no choice -- either source more supplies abroad or find oil substitutes,'' said Gideon Lo, an analyst with DBS Vickers Hong Kong Ltd.
China's crude oil imports have risen over the past decade from zero to 40 percent of local consumption, as demand more than doubled to over 6 million barrels a day, worth more than $200 million a day at current prices.
Coal for Cars
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