China National Coal Group, the country's third-largest coal producer, has joined Shaanxi Yanchang Petroleum (Group) and a Thai firm to plough 38.4 billion yuan (HK$43.63 billion) into a project to turn coal into chemicals.
The project - to be based in Jingbian county, Yulin city, in Shaanxi province - is part of the country's long-term plan to enhance energy security and reduce pollution even while using fossil fuels.
State-owned China National Coal, the parent of listed China Coal Energy, will have a 30 per cent stake in the project, while state-owned Yanchang will have 40 per cent and Thailand New Energy Chemical Investment Group 30 per cent, China National Coal said.
The three companies signed an investment agreement last Friday. No project timetable was provided.
The project will initially have the capacity to turn coal into 1.8 million tonnes of methanol a year, which will then be processed into 600,000 tonnes of olefins - intermediate chemicals derived from crude oil that are used in making plastics, resins and solvents.
The planned expansion of the project will see its olefin capacity increase to 1.1 million tonnes and subsequently to 2.1 million tonnes.
The mainland imports about 50 per cent of its olefin needs, as domestic capacity expansion lags behind demand.