Shenhua sets timetable for sale of asset

Shenhua Group, the parent company of listed China Shenhua Energy, says it plans to complete the sale of a coal-to-chemical project to the listed unit by the end of the year amid green group claims it was damaging the environment.

Ling Wen, the president of China Shenhua and vice-president of Shenhua Group, told reporters the timetable for the sale of the project in Baotou, Inner Mongolia, without elaborating.

China Shenhua said in December last year that the project's preliminary estimated asset value was less than 6 per cent of its equity attributable to shareholders of 234 billion yuan (HK$294.2 billion) on June 30 last year. Its estimated net profit was less than 3 per cent of its 26.7 billion yuan in last year's first half.

Shenhua Group's president Zhang Yuzhuo estimated in 2008 that the project would cost 16 billion yuan to build. It had a designed annual capacity to produce from coal 1.8 million tonnes of methanol, 300,000 tonnes of ethylene and 300,000 tonnes of propylene.

Methanol is a fuel and an industrial chemical, while ethylene and propylene are key building blocks of many plastic products.

A UBS research report noted mainland companies' record in the nascent coal-to-chemical industry had mixed results, with Shenhua's Baotou project considered a success, while Datang International Power Generation's project in Duolun, Inner Mongolia, had encountered difficulties.