By John W. Miller
Houston-based Synthesis Energy Systems, Inc. will announce a
$105 million deal on Wednesday to help build three plants in China
that turn coal into synthetic gas.
The deal for the U.S. chemical firm underscores the growing
market in coal gasification as China looks to reduce carbon
emissions while satisfying its voracious appetite for energy.
China and the U.S. last month agreed to new limits on carbon
emissions, starting in 2025. Looking to deploy its seemingly
infinite reserves of coal, China has been encouraging its
state-backed companies to forge partnerships with Western chemicals
companies.
It aims to increase its production of synthetic gas from coal to
around 10% by 2020 from almost nothing a few years ago. There are
currently 118 gasification plants in China, and another 60 under
construction, according to an Energy Department database.
And over the past decade, U.S. and Western firms such as Dow
Chemical Co. and Celanese Corp. have built plants in China that
convert coal into gas, paint and plastics. China is a key market
for these firms, which in their home markets face stagnant
economies and pressures related to fears of environmental damage.
Only a handful of companies are building gasification plants in the
U.S. or Europe.
The three SES plants will all supply gas to aluminum smelters
belonging to Aluminum Corp. of China, or Chalco, China's biggest
aluminum producer. The plants, located in Shandong, Henan and
Shanxi provinces, south of Beijing, make aluminum from the raw
material alumina, a fiercely energy intensive process. China is the
world's largest supplier and buyer of aluminum, producing and
consuming around half the world's supply of the metal.
Gasifying coal produces less carbon dioxide than burning it,
although it is still more polluting that ordinary natural gas, say
energy experts.
SES's Chinese joint venture partner, Zhangjiagang Chemical
Machinery Co., Ltd. will build the plants using SES technology and
expertise. SES has already contributed to two plants in China.
Robert Rigdon, SES' president and chief executive, said the deal
would help develop a market "for new plants and the retrofit of
large numbers of existing facilities in the region," including for
other industries.
SES announced the joint venture earlier this year. The deal to
be announced Wednesday "helps validate our decision to joint
venture our technology," said Mr. Rigdon.
Write to John W. Miller at john.miller@wsj.com
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