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Turning from 'black gold' to green profits

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2019-07-26 10:33:22China Daily Editor : Mo Hong'e ECNS App Download

Shanxi has prospered from its coal mining industry, but now it's redefining itself as a high-end manufacturing hub

Editor's Note:As the People's Republic of China prepares to celebrate its 70th anniversary on Oct 1, China Daily is featuring a series of stories on the role regions have played in the country's development and where they are today.

Made prosperous by the "black gold" of its coal industry, Shanxi is now on the fast track to transforming itself into a tech-driven innovation province for high-end manufacturing, green energy and premium chemical products.

In the busy factory of Jinmei Huayu Coal Chemical in Jincheng, 2.2 million metric tons of high-sulfur coal are turned into 1.2 million tons of methane, 500,000 tons of clean energy and multiple chemical products every year by the 300 employees.

Shi Wenfeng, the plant's chief dispatcher, said the factory began operations in August last year and by February had earned 660 million yuan ($95.9 million) in revenue.

"The exciting thing is that the project is earning profits already," Shi said.

In Changzhi city, a new production plant owned by the leading coal company Lu'an Mining Group has been running at full capacity since September.

According to the company's profile, in the first phase of the "180 Project" plant alone, 12,000 tons of coal a day was turned into value-added chemical products.

The 180 Project was designed to produce 1.8 million tons of oil products from high-sulfur coal every year. Currently it can produce about 1 million tons a year.

One of the products it makes is synthetic oil that can be used to make high-quality synthetic lubricants. Only foreign companies were able to produce such lubricants in the past, said Liu Junyi, general manager of Lu'an Mining Group, adding that many Chinese companies are making forays into producing coal-based chemicals.

The retail price per ton of the oil they produce to make the synthetic lubricant is 50 times that of the raw material, high-sulfur coal. Lu'an Mining Group estimates 40 billion tons of coal underground can be turned into the value-added, environmentally friendly commodity.

The company said the oil product initially produced at the plant was limited in scope and used mainly in base products.

But new production lines have been added and the company is now able to make 54 kinds of high-end chemical products.

Coal is not only a source for specialized oil products, but also a more economical way to produce hydrogen through a process called gasification.

Feng Zhiwu, chairman at Yangmei Chemical, a Shanxi-based company, said that hydrogen made from coal has been one of their most profitable products, compared with traditional ones such as ammonia and urea.

"There are a number of ways to produce hydrogen, such as from oil, water and coal, but the cheapest is from coal," Feng said.

"For every cubic meter of hydrogen made from oil, the cost is about 1.6 yuan to 1.7 yuan, but even when the price of coal goes up, the cost can be as low as 0.9 yuan."

Feng said the company makes a profit of 0.3 yuan on every cu m of hydrogen sold.

These success stories are indicative of Shanxi turning its traditional coal businesses into cleaner, greener and more profitable industries.

According to the Shanxi government work report this year, overcapacity of coal production was cut by 30.9 million tons last year. Over the past three years, the province has reduced overcapacity by a total of 88.4 million tons.

While coal production has fallen, optimization of the coal industry has risen, with more than 20 coal-based industrial parks established in Shanxi in recent years.

"Clean and renewable energy plays a leading role in meeting China's growing demand for energy," said Han Wenke, director of the Energy Research Institute at the National Development and Reform Commission.

"Green production and efficient use of coal will facilitate the country's industrial upgrade for overall green economic growth."

Han said China will see a drastic decline in coal consumption after 2020. Coal is expected to make up less than 50 percent of total energy consumption in 2030, and 30 percent in 2050.

Han Dong'e, a researcher at the Shanxi Academy of Social Sciences, said in recent years the province had been reducing its dependency on coal.

"Shanxi is the energy base of China with the country's second largest coal production capacity, which has powered national economic growth, but also brought the structural problem of being over dependent on coal," Han said.

"Shanxi has been very clear with its goal to lower its annual production of coal to 1 billion tons by 2020."

Han said under the targets, the main objective will be to increase the supply of high-quality coal.

While optimizing its traditional coal sector, Shanxi is also vowing to turn itself into a high-end manufacturing base.

According to the provincial statistics bureau, last year Shanxi's GDP hit 1.68 trillion yuan, up 6.7 percent year-on-year. Among the industries with yearly revenue over 20 million yuan, the coal industry saw only a 0.3 percent growth while the manufacturing sector went up 9.2 percent.

Overall, the manufacturing sector contributed 76.4 percent of Shanxi's industrial growth.

Early this year, the provincial department of industry and information technology said Shanxi will accelerate the development of industries, including railway transportation, new energy vehicles, biopharmaceuticals and modern coal industries.

According to the department's 2019 action plan, the province will build an industrial park and clusters for emerging industries. This includes turning Taiyuan and Datong into transportation equipment manufacturing hubs, and Taiyuan, Datong, Changzhi and Yuncheng into automobile manufacturing bases.

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