Province diversifies output with new product offerings

Shanxi province, a traditional coal production hub in China, is taking steps to shift from heavily polluting coal to cleaner, greener and more profitable industries.

In the province, reducing dependency on coal has become a focus of its high-quality development path, according to local authorities.

According to the Shanxi government, more than 20 coal-centered industrial parks have been established in the province in recent years to support the coal industry transformation and upgrading.

"Clean and renewable energy plays a leading role in meeting China's growing demand for energy," said Han Wenke, former 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."

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, according to Han.

In Shanxi's Changzhi, a new production plant called the 180 Project, which can turn coal into value-added chemical products, has been running at full capacity since last September.

The project, owned by leading coal company Lu'an Group, was designed to produce 1.8 million metric tons of oil products from high-sulfur coal every year. So far, 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 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. It is estimated that there are 40 billion tons of such high-sulfur coal underground in Shanxi, which can create huge economic benefit for Lu'an.

The company said the oil product initially produced at the plant was limited in scope.

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

"Shanxi is the energy hub 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 overly dependent on coal," said Han Dong'e, a researcher at the Shanxi Academy of Social Sciences.

"Shanxi has been very clear 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.

Shanxi has been taking measures to cut excess capacity in coal production over the past three years with the total reduction reaching 88.4 million tons, according to the provincial government. In 2018, 30.9 million tons of production capacity was cut.