China’s MEP orders Shenhua to suspend operations of its coal-to-olefins plant in Baotou

Shenhua Baotou Coal Chemical Co., a subsidiary of China’s energy giant Shenhua Group, has been ordered by the Ministry of Environmental Protection (MEP) to suspend operations at its coal-to-olefins (CTO) plant in Inner Mongolia for violation of environmental regulations.

The MEP also ordered Shenhua not to resume production without its permission.

The official Xinhua News Agency estimated that the suspension of the project would cause the Shenhua Group CNY123 million (US$19.5 million) per month.

This project, with a total investment of CNY17 billion (US$2.7 billion), is the largest CTO project in the world.

After entering into trial operation in January 2011, the project has realized profits of CNY1 billion (US$158.8 million) in 2011. In the first half of 2012, the project’s profit was CNY600 million (US$95.3 million).

The project passed MEP’s environmental assessment in March 2005 and started trial operations in June 2010. However, MEP has not yet inspected the company’s environmental protection facilities, according to Xinhua News.

The Baotou CTO project is designed with an annual production capacity of 1.8 million tons of methanol, 600,000 tons of methanol-to-olefin, 310,000 tons of polypropylene and 300,000 tons of polyethylene.

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