Henan Jinma Energy plans to produce more natural gas as a by-product of its coke-production operations as part of broader efforts by the authorities to tackle chronic air pollution in northern China.
The company, which is about to list its shares in Hong Kong, is taking advantage of state policy supporting the change of energy used for home heating and industrial energy generation from coal to natural gas. The pollution from burning coal produces a thick winter smog in the north of the country, which is a major health hazard.
“Leveraging on our successful track record and past experience in extending our involvement in [coking chemical production], we intend to further extend the value chain to produce downstream energy products, mainly liquefied natural gas (LNG),” Jinma said in its listing prospectus.
“We plan to capitalise on the market demand for clean energy driven by the [mainland] government’s environmental policies.”
Mainland China’s natural gas consumption grew 13 per cent year on year in the first seven months of the year, double last year’s growth of 6.6 per cent. The increase was helped by Beijing’s push for local governments to implement policies to drive “coal to gas fuel conversion” for rural residential heating, including subsidies to fund the conversion of heating facilities.
The coal gas can be further processed to produce hydrogen and LNG.