Turning from 'black gold' to green profits

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.