BEIJING - Yanzhou
Coal Mining, mainland China's second-largest
listed coal miner, said its parent company
Yankuang Group has received approval from the
government to develop a 5-million-ton coal-to-oil
project.
The first phase of the project,
in northwest China's Shaanxi province, is
estimated to cost 10 billion yuan (US$1.25
billion). Its
capacity will reach 1 million
tons of oil products a year, Chief Financial
Officer Wu Yuxiang told reporters in Hong Kong April 25.
"[The] total production capacity of the
project will amount to five million tons
annually," he said, without giving a timetable.
Yankung Group will mainly participate in the
preliminary stage of the project, which "will be
handed over to Yanzhou Coal when the time is
ripe," said Wu.
"Given the abundant
reserves of coal and inadequacy of oil and natural
gas on the mainland, the conversion of coal to oil
products will be a trend in the future," said Wu.
Other mainland coal mines are also becoming active
in transforming coal into oil products to cope
with rising oil demand.
Shenhua Group, the
largest coal company on the mainland, is a pioneer
of coal-to-oil technology and has poured
considerable funds into the research and
development of its liquefaction technology since
1997. It will start production of its first
coal-to-liquid project at the end of next year.
Yanzhou Coal said April 25 it planned to
produce 6% more commercial coal this year. It had
produced 13% less, or 31.94 million tons of
commercial coal - suitable for sale - in 2005,
partly because of delays in relocating people in
six villages living above its mines. "That dragged
down our output by 34.6 million tons," said Wu.
But "the impact from the disruptions has
been eliminated entirely in April," Wu Yuxiang
told reporters. "From now on, all of our coal
mines will run at full rates to meet demand."
Yanzhou, which has been acquiring assets at home
and abroad, would continue to do so, Wu said.
The company expects to sign an agreement
in the second quarter of this year to buy a coal
mine in Shaanxi province. The project, designed to
produce 8 million tons of coal a year, would start
production by the end of this year, Wu said.
Capacity will be raised to 20 million tons
annually over the next three to five years, he
added.
