The coking facility, which will cost an estimated $70m to complete, is expected to launch production of metallurgical and chemical coke, coal gas, and various chemical products by early 2011.
The coking facility will have an anticipated maximum annual production capacity of 900,000 metric tons of coke. The management projects that, if completed as planned, the launch of the new facility could result in a five-fold or more increase in the company’s annual coke production and sales volume from the fiscal year 2012 and beyond, compared to current levels.
SinoCoking presently relies on its three parallel WG-86 type coke ovens, which have certain technical limitations having a production capacity of up to 250,000 metric tons per year.
The coking facility will be capable of utilizing a range of coal inputs compared to the company’s existing plant, with lower thermal properties (a G-index as low as 50). Since the average cost of inputs will decrease, this is expected to enable SinoCoking to produce coke at a better profit margin. The facility is also expected to generate an additional 66.5 million kWh of electricity each year from the conversion of heat emitted from the coal-gas powered system, which is used to power steam generators.
The new facility will also produce purified coal gas as a fuel source for use by city residents. These two byproducts alone could result in an additional estimated $43m to $62m in projected incremental revenue per year for SinoCoking, based on current energy prices and currency translation rates.
The company’s plans to provide coal gas to local residents have received approval from the city of Daying, which will involve providing coal gas to consumers at a price per thermal equivalent unit that is said to be 20% less than the current price of liquid natural gas. In addition, SinoCoking anticipates that the coking facility will expand its product portfolio, enabling it to offer its customers other products such as crude benzol, sulfur, and ammonium sulfate.
Jianhua Lv, chairman and CEO of SinoCoking, said: “We view this as a key step in the implementation of our growth strategy. Power and fuel scarcity, as well as environmental side effects of industrial growth, are key issues in China today. We look forward to the completion of this project, to further solidify our leadership position in the regional market.”
