Datong Coal, Guangzhou Firm to Build Methanol Plant

Datong Coal Mine Group, a top coal producer in China, and a unit of Guangzhou Development Industry (Holdings) Co will build a plant that can produce 1.2 million tonnes of methanol from coal each year, Guangdong Development said on Wednesday.

The two companies would invest about CNY2.8bn in the first phase of the 600,000t-per-year project, located in Datong in northern Shanxi Province, Guangzhou Development said in a filing to the Shanghai Stock Exchange.

"Investment in the Datong methanol project would make full use of the current oil storage and oil terminals and establish an integrated industry chain to satisfy demand for clean energy products in the Pearl River Delta", said Guangzhou Development, a state-owned energy and power supplier.

China's top coal producing provinces are planning a massive expansion of methanol capacity to wring more profit from coal and offset high motor fuel costs, as China tries to limit dependence on pricey crude oil imports.

A number of provinces including Shanxi, the top coal producer, have set up pilot projects to blend methanol into gasoline, despite side effects like increased engine corrosion.

Datong Coal Mine Group will hold a 55% stake in the venture, and the Guangzhou Development unit will own the rest.

By Rujun Shen, Reuters