Panorama of Yushen Industrial Park

The state of Yulin City

The procession of bridal cars

HighChem (Shaanxi) Management Co., Ltd. General Manager Chen Guoping

──What kind of region is Yulin City in Shaanxi Province?

Yulin City is located in the northern part of Shaanxi Province, neighboring Shanxi Province, Inner Mongolia, and Gansu, where four provinces intersect. Yulin City is so rich in resources that it is called China’s Kuwait, especially abundant in coal and natural gas. It is said that both coal and natural gas account for 10% of China’s storage capacity.

Looking at the direction of development of China’s chemical industry, the coastal area is the center of petrochemicals, but the inland western part is active in coal chemistry, and Yulin City is counted as one of China’s four major coal chemical industry model districts.

Also, nature is rich and there is a large potential for solar power generation and wind power generation.

──Please tell us about the features of the coal chemical complex in Yulin City.

The first feature is that Yulin’s coal has a high calorific value and is high-quality coal with a low content of impurities such as phosphorus and sulfur. In coal chemistry, there is a process of gasifying coal, and the lower the impurities, the more the processing cost can be suppressed. This enhances the competitiveness of the chemical products produced within the Yulin coal chemical complex.

Another feature is that it is a gathering place for major energy companies in China. For example, the National Energy Group, China Coal Group, and Yanchang Petroleum are all planning to invest more than 100 billion yuan in this coal chemical complex. Shaanxi Coal Industry Group, which we are working with, will also start a large-scale coal chemical investment again this year, and the total investment amount will exceed 200 billion yuan.

──What kind of business development is HighChem doing in Yulin?

The relationship between HighChem and Yulin dates back to 2014. We participated in the overall planning of a project in the Shaanxi Media Group Yulin Chemical (hereinafter referred to as Yulin Chemical) park, in conjunction with a major Japanese research company.

And, the first major project for HighChem in Yulin is a technology license. First of all, First of all, we licensed the SEG® technology owned by HighChem to a plant where Yulin Chemical plans to produce ethylene glycol from coal with an annual production of 1.8 million tons.​

SEG® technology is a technology to produce ethylene glycol, a raw material for polyester, from non-petroleum sources. This technology is based on the technology of UBE Industries, Ltd. (hereinafter referred to as UBE) to produce DMO from coal gasification, and HighChem has developed and scaled up and commercialized the technology to produce ethylene glycol (EG) from DMO, established as SEG® technology, and is expanding a large-scale license business in China.

Yulin Chemical’s 1.8 million tons/year SEG® plant

In addition, we also licensed Yulin Chemical to produce DMC, a solvent for lithium-ion secondary battery electrolyte, from synthetic gas, which is a raw material of UBE. The DMC plant is scheduled to complete the first phase of a 100,000 tons/year plant in September 2024, and the second phase of a 400,000 tons/year plant is scheduled to be completed by the end of 2025. If all are completed, it will be 500,000 tons/year, which will also be one of the largest production scales in the world.

DMC Plant Office

Furthermore, HighChem is not only licensing these projects but also making business investments. In order to smoothly operate the business locally, we established the Northern Headquarters in 2021 and set up an office in the Yushen Industrial Park where the plant is located.

In September 2022, the plant that produces 1.8 million tons/year of ethylene glycol derived from coal, as mentioned earlier, was completed. This plant has already achieved full production in just one year of operation, and due to its high price competitiveness, it accounts for more than 10% of the total production volume of ethylene glycol in China, including the petroleum method.

Also, last fiscal year, we jointly established a joint venture company with Yulin Chemical to sell basic chemicals produced in Yulin.  We are expanding the sales of chemicals produced in Yulin, such as ethylene glycol and DMC, not only in China but also globally.

In this way,  in Yulin, HighChem has built an important position that provides total business solutions, from business planning to technology provision, business investment, and then product sales.

──Even in China, carbon neutral policies are being implemented. Will the coal chemical industry continue to develop in this context?

Yes, indeed. In the coal chemical industry, the emission of CO2 has also started to be strictly managed. Government procedures have become stricter than before, and for the development of the coal chemical industry, the establishment of a greener business environment and growth strategy, such as the use of renewable energy, green hydrogen, and CCUS, has become a top priority.

At HighChem, last year we visited Japan with the mayor of Yulin City and the head of the industrial park, and had opportunities to interact with Mishima City Hall and Japanese companies that are working on carbon neutrality, and we have been preparing to work on reducing CO2.
Indeed, for the development of the coal chemical industry, it is necessary to seriously consider the reduction of greenhouse gas emissions such as CO2, and the use of CO2.

First of all, for the reduction of greenhouse gas emissions, it is essential to realize energy conservation through the use of renewable energy and the introduction of the latest equipment for circulation.

Wind power generation facility in the coal chemical complex

Also, the development of CCU technology, which uses CO2 to manufacture chemical products, is also essential. Currently, we are developing technologies and preparing the environment to produce raw materials such as methane (CH4), hydrogen (H2), and carbon monoxide (CO) using renewable energy such as wind power and solar power. Currently, the cost of these renewable energies is higher than that of coal chemistry, but in the future, it will be equivalent or lower.

HighChem is developing a technology to produce green ethylene glycol from biomass and CO2 in the air. If it can be demonstrated that this technology, which is currently in the demonstration stage, shows no problems with the process and technology, and if the issues of cost management and acceptance by downstream customers can be cleared, it will be possible to produce on a large scale.

Indeed, a major coal-producing area like Yulin needs to walk the path of integrating well with new energy.

──How will HighChem develop its business in Yulin to demonstrate leadership in the carbon-neutral era?

HighChem has been focusing on the development of technologies for a sustainable society, such as green fibers like biodegradable materials, Lib secondary battery materials, and hydrogen.

For biodegradable materials, we have developed PLA (polylactic acid) fibers, established the HIGHLACT® brand, and are currently developing markets for customers in Europe and the United States. In this field, we plan to manufacture biodegradable materials such as PPC (biodegradable polypropylene carbonate) that can be manufactured from coal and CO2 in Yulin.

Also, for secondary battery materials such as DMC and EMC, considering the manufacturing cost of electrolyte, usage scenarios, transportation cost, etc., Yulin, which is rich in resources, will become a great place for the production of so-called new energy battery materials.

At HighChem, we are confident that we can demonstrate these technical capabilities and strengths, improve our presence here in Yulin, and towards the world.