China BlueChemical, the fertiliser unit of China National Offshore Oil Corp, is in talks to invest in chemical projects using coal as raw material in light of the shortage of domestic natural gas for its production.
Chief executive Yang Xinmin said the urea producer was in talks with companies including coal producers to co-operate on the projects, although it would be cautious given its lack of experience.
BlueChem said in late April it was in negotiations with the municipal government of Jincheng, Shanxi province, to set up a plant in the city capable of turning coal into one million tonnes of granular urea annually.
Mr Yang said his firm was also carrying out a feasibility study on using coal instead of gas as raw material for its Inner Mongolia plant.
The company could cut cost by 20 per cent or 30 per cent, depending on the type of manufacturing process and the grade of coal used, said deputy general manager Fang Yong.
'The significance is not so much in how much we can save by using coal instead of gas, but in the fact that the mainland does not have enough gas to support large-scale chemical production,' Mr Fang said.