Dow Chemical Co. expanded its participation in China's coal-to-chemicals projects by licensing its Unipol polypropylene technology to a Chinese firm for use in a new PP plant.
Shenhua Baotou Coal Chemicals Co. will construct the 661 million-pound-per-year PP facility in Baotou, China, within the Shenhua Baotou Coal-to-Olefin complex. The complex is one of the pioneering facilities of its kind in the world. It is scheduled to begin operating in 2010.
A major player in the coal-to-olefins industry, Dow has an interest in another complex being built in Shaanxi Province through a joint venture with Shenhua Baotou's parent company, Shenhua Group Corp. Ltd. Shenhua Group expects its overall capacity of coal liquids and chemicals to reach 8.8 billion pounds by 2010.
With rising world oil prices creating tighter margins for plastics producers and compounders, coal-based olefins are likely to become a welcome addition to the market, industry experts said. The Dow-Shenhua project is particularly welcome in Shaanxi Province, which has massive coal reserves but remains one of the poorest provinces in the country.
The Dow-Shenhua project fulfills two Chinese government objectives: to relieve poverty in western provinces through attracting investment to those areas, and to promote projects with environment-friendly technologies.
The project will use ``clean coal'' technologies that convert coal to methanol to produce ethylene and propylene, the building blocks of various plastics and chemical products. Dow has contributed much of the technology and know-how to the project, according to industry sources.
But Dow is not neglecting its downstream strengths in the China market either. At the end of May, the company released Infuse-brand olefin block copolymers in China. Dow announced the addition at the Chinaplas trade show, held May 21-24 in Guangzhou.
Elastomers offer more flexibility and heat resistance than other materials used on the China market at the moment. With the growth of the automotive and electronics/electrical industries, elastomer sales have been growing in the double digits during the past two years.
Dow has annual sales of $49 billion and employs 43,000 worldwide. Shenhua Group focuses on the coal industry, with integrated businesses ranging from coal, power, railway and port to coal liquefaction. Its Shenhua Energy Co. Ltd. subsidiary is listed on the Hong Kong stock exchange.
Shenhua Group currently has 29 subsidiaries, both wholly and majority owned. The company employs 148,000.