Chinese miner to build facility to turn coal into petroleum products

China’s largest coal miner will invest about $24 billion in building a facility to convert coal into petroleum products in a bid to ease an expected glut in the supply of the energy commodity.

According to a Bloomberg report, the facility, which will start operating in 2027, would be powered by wind and solar energy.

China is the world’s largest producer of coal and is looking for new ways to use the commodity, whose production has reached an all-time high of 4.7 billion tons in 2023. Coal in petrochemicals is a way to use coal in addition to using to it for energy. steel generation and production.

However, Bloomberg noted in its report that the increase in production capacity coincided with a petrochemical glut after a period of rapid growth. Last year, coal-oil producers lost profits by 53% amid weaker demand. One contributing factor has been lower oil prices, as these profits depend on a wider gap between coal and oil prices.

Coal, meanwhile, is still the biggest part of China’s energy mix, accounting for 71 percent of total output last year. China is the largest investor and developer of wind and solar power in the world, and they have begun to undermine coal, but it will be some time before they dethrone it.

In 2021, Chinese authorities said they would target wind and solar power to surpass installed fossil fuel capacity by 2025. That target was met earlier than the deadline, 50.9% of China’s generating capacity this year coming from non-hydrocarbon resources.

This helped China reduce the share of coal in its total output earlier this year to around 60%. The drop came largely from a rise in hydropower output after two years of growth, although climate change activists attributed the development to China’s transition efforts.

By Charles Kennedy for Oilprice.com

More top reads from Oilprice.com