Kingho’s chain of survival

Coal market has experienced a "cold" season at the beginning of the new year of 2014 that should have been peak demand season for coal sale, coal market is increasingly competitive as coal sale has been struggled. However, the mode of chain of survival by Kingho energy has provided a classic model that can be used as reference for other coal enterprises.
    It was at noon, one day before Chinese Lunar New Year, Horgas, a small frontier county located in the northern part of Xinjiang, was still freezing, with bright yellow pipelines extending into the distance-the intakes of west-east gas transmission project in Horgas. Breathing out white steam, the reporters who kept arriving from far away seemingly knew an important even would be happening here.
    Four months ago, Xinjiang Kingho Energy Group Co., Ltd. produced China’s first cube of SNG, and today, SNG will be transported to other parts of our country through No. 2 west-east gas pipeline.
    At 12 O’clock a.m., following the command, the operator is operating flow meter valve, and instantaneously, real-time flow is displayed on the computer monitor, marking commercial operation of SNG.
    It’s a success for Kingho. For other coal enterprises struggling in cold winter night, Kingho’s success is just like a rising Star. In 2013, the total profit of China’s large coal enterprises amounted to 236.99 billion yuan, down by 1/3 compared with 2012, which is lowest in recent five years, according to latest data revealed by the Office for National Statistics. In contrast of the industry dilemma, the revenue of China Kingho Group in 2013 reached over ten billion yuan at a second time.
    “Coal in Xinjiang is characterized by low ash and sulfur content, which is very suitable for coal chemical production,” said Xiao Renjun, Director of Energy Office of Xinjiang National Development and Reform Commission. “The operation of Kingho Xinjiang’s annual 5.5 billion m3 SNG exemplary project is conductive to improving SNG technology and promoting transformation of coal resources advantages into economic advantages.”

    Earliest SNG adopter 
    Xinjiang Kingho coal chemical industry recycling economic industrial park located in Yidong industrial park, Zone B in Yining county where there was a waste land has been built into a modern large-scale industrial park with numerous towers and pipelines after 5-year construction.
    Seven months ago, Xinjiang Kingho Energy Group Co., Ltd. produced China’s first cube of SNG in this park. In order to ensure that SNG transported through the main pipeline to other parts of the country is qualified, 4 months of commissioning was conducted and a large number of SNG samples were taken and sent to CNPC Gas Quality Inspection Center for testing. During this period, SNG was not sold until all the indicators complied with or exceeded the relevant standards.
    Coal chemical industry is sort of deep-processing of coal, currently with liquefaction, gasification techniques, etc. SNG refers to SNG production. SNG is a kind of gas with combustible composite that is produced after coal as raw material that is gasified under pressure and the gasified gas is desulphurized and purified. SNG is a kind of irreplaceable heat source gas produced using clean coal utilization technique, which can be used to ease insufficient supply of natural gas and to alleviate the pressure caused due to environment pollution.
    It is not easy for Kingho to produce China’s first cubic meters of SNG. But as a national exemplary project and key project in the autonomous region, Xinjiang Kingho's 5.5 billion m3/year SNG is fortunate without any doubt. It is first SNG project approved by the state in Xinjiang and the first SNG project approved by NDRC after approval procedures were under tight control after June, 2010, and it is also the top coal incentive processing exemplary project listed in China’s "twelfth five-year" plan. And it is the largest national level exemplary project developed by private company in China. It has attracted wide attention from the entire coal industry since it is approved, constructed, completed and operated.
    Xinjiang has abundant coal resources, with estimated coal reserve of 2.19 trillion tons, accounting for 40% of the national total reserves. How to speed up the transformation of advantageous resources and maximize profit has been a big concern that has plagued to the development of local economy.
    SNG is a characteristic industry in China who has abundant coal reserves. To resolve problem of petroleum shortage and energy security, research institutions in our country started to carry on coal chemical technology R&D as early as in 1950s, production of PVC by using calcium carbide method, alcohol ether produced by using coal, etc. were major breakthroughs. In recent years, breakthroughs are made the study of MTO, CTEG and SNG technologies and MTO, CTEG and SNG have been industrialized. Technically, SNG industry is one of the most matured new type of coal chemical industry.
    As early as in April 2011, Xinjiang held briefings on SNG project and site meeting on promotion of new type of industrialized construction and deployed new type of industry, especially coal chemical industry.
    Kingho lived up to the expectation of local government and residents. It only took three months for Kingho Group to settle down the project from project survey, contract signing, construction of industrial park to project foundation stone laying, opening a prelude for SNG project development in Ili and even in the autonomous region.
    “This is due to support from the central government and government of Xinjiang autonomous region,” said Xu Zhong, General Manager of Kingho Xinjiang Energy Group. It is seemingly like reciprocal and even flattering remarks, but Xinjiang autonomous region did offer Kingho great support and helped Kingho resolve problems such as coal resource allocation and natural gas pipeline interconnection.  Government of Xinjiang autonomous region also provided Kingho preferential policies on SNG tariff and taxes, relieving Kingho’s worries over its further development in Xinjiang.
    Facing questions over the pollution allegedly caused by SNG and even entire coal chemical industry, Xu Zhong explained with confidence, "Kingho adopted a kind of recycling economic development pattern that is characterized by reducing pollutants with recycling process,” he said. “We have adopted and advanced process called crushed coal pressurized gasification technology with purification of rectisol, which allows significant reduction of pollutant emissions. The produced wastewater is treated by sewage treatment plant and it is returned into recycling system after it is purified in compliance with grade I standard so as to avoid waste water from polluting environment.” This is why in his opinion SNG is so favored.
    Construction and design of Xinjiang Kingho coal chemical industry recycling economy industrial park are exemplary of characteristics of recycling economy. With fully closed recycling economy industrial chain, the waste materials produced from the upstream production links are served as production raw materials for the downstream production links. In addition, the entire industrial park almost produces no waste gas, waste water and other solid waste emissions. All the coal materials are fully utilized with zero waste emission.

    Chain development
    Huo Qinghua, Kingho Group Chairman, ranked no. 135 on 2013 Forbes China Rich List with wealth of 6.83 billion yuan.
    Compared with China’s developed southeast coastal area, the number of enterprises in Inner Mongolia is incomparably low. However, it is a stage for large-scale private enterprises. In Inner Mongolia, there are not many small and medium-sized enterprises and state-owned enterprises. Therefore, large privates with huge assets tend to grow at astonishing rate by adopting diversified development strategies and relying on advantages of local energy.
    Kingho rises to fame from a small coal enterprise to a multinational, cross-regional private enterprise. It has transformed from producing coal into producing premium end coal chemical products, such as coke, coarse benzene, coal tar, FMTA, coal tar hydrogenation, etc. The footsteps of Kingho’s hard working blazers can be traced from the foot of La Shan Helan Mountain to the Badain Jaran Desert, from Mongolia's South Gobi province to the Qinghai-Tibet plateau. Within short span of 10 years, Kingho has created a number of miracles in counterparts, and nowadays, Kingho has grown into a conglomerate group specialized in development and recycling utilization of mineral resources.
    Coal, dubbed as “black gold”, is valuable wealth in Inner Mongolia where the proven coal reserves reaches 701.6 billion tons, continue to rank the top place, in which, coal reserves in Erdos region accounts for 1/6 of the total reserves in China. Over the years, the development of coal resources has been controversial due to low efficiency of energy utilization, environmental pollution, etc., but Inner Mongolia Kingho Group is an exception.
    Inner Mongolia Kingho Group, formerly known as Ningxia Kingho Co. Ltd., was introduced as an investment project in Alxa Zuoqi in 1995 and in the same year, it bought Alxa Bailing state-owned coal mine, since then, Kingho has embarked on the cause of mineral resources development.
    With development model of "resources-product-renewable resources", Inner Mongolia Kingho Group has invested projects such as 3 million ton heavy medium coal washing, 2 million ton coking, 200,000 ton COG methanol production, 100 million pieces of fly ash autoclaved bricks. In 2002, Kingho Inner Mongolia Group implemented “Going out” strategy, Kingho-Mac joint venture developed Mongolia’s Naryn Sukhait Coal Mine that has coal reserve of 1.69 billion tons. Inner Mongolia Kingho Group became China’s first enterprise in western region that has successfully developed recycling economy by utilizing foreign resources, which has strengthened expansion of coal industry.

    In 2004, Kingho Group changed traditional extensive management mode and expanded industry chains by fully utilizing advantages of coal resources in response to the state’s calling on industrial policy on the development of recycling economy. Kingho Group has shaped recycling and green based development mode and has built Kingho recycling economy industrial park that is backed up by Alxa economic development zone. With development model of "resources-product-renewable resources", Kingho Group has built a resource-saving, environment friendly, safe exemplary park.
    Through March 2005 to September 2007, Kingho commenced construction of phase I coal chemical project, coke oven ignition project, phase II coal chemical project, ancillary logistics project, heavy medium coal washing project, 200,000 ton methanol project. Heavy medium coal washing project has been put into operation. Alxa Clean Coal Co. Ltd. was founded by Inner Mongolia Kingho Group. Inner Mongolia Kingho Group Environmental Chemicals Co., Ltd. was founded while 200,000 ton methanol project was put into production. In March 2008, bidding invitation for 1.8 million ton/year rehabilitation project developed by Inner Mongolia Kingho Group Bailing Coal Co., Ltd. commenced and meanwhile Inner Mongolia Kingho Group New Green Building Material Co., Ltd. was founded. With the development and operation of varied projects, a recycling economy industrial chain of "coal-coke-chemical product-steam-chemical industry-building materials" with completed functions and rational structures was shaped.
    Kingho’s business was expanded to snow-covered plateau with altitude of over 5000 meters. In 2003, Qinghai Kingho Mining Technology Co., Ltd. was founded and it successfully developed Muli coal mine. In 2006, Qinghai Kingho Coal Chemicals Co, Ltd. was founded. Its development motto is “emission reduction, resource reusing and recycling". With comprehensive planning, high-tech, high benefit development objectives, Qinghai Kingho Coal Chemicals Co, Ltd. invested 2.87 billion yuan for phase I 1 million ton coking project, 3 million ton clean coal project, residency building and railway in industrial park. In September, 2009, phase II 1.1 million ton coking and 2×15MW thermal power plant were implemented.
    To increase coking output and to coal tar refining technology and promote multipurpose utilization of resources and integral development of coal chemical, fine chemical engineering, energy and building materials industry, Qinghai Kingho Coal Chemicals Co, Ltd. invested 37 billion yuan, opening a prelude to construction of coal-based poly-generation project. It also developed ancillary facilities for coal tar, crude benzene hydrogenation, methanol (produced from COG), MTG, CWSTG, coal gangue power generation, ash brick, fly ash cement, dry quenching gas power generation, etc. so as to extend industry chain in coal tar chemical poly-product industries. Kingho has been dedicated to maximizing efficiency of resource utilization by transforming waste gas, waste residue, waste liquid into usable resources in integral development of fine chemical industry, energy and building materials industry.
    Nowadays, Qinghai Coal Chemicals Co, Ltd. has annual production capacity of 6 million tons of coke, 600,000 tons of methanol, 270,000 tons of polyethylene, 100000 tons of styrene and 300,000 tons of acrylic.
    Coal market has experienced an expected "cold" season ar the beginning of the new year of 2014 that should have been peak demand season for coal sale. Large coal enterprises in China have cut prices of some types of coals market in order to grab market share, resulting in sharp rise of coal inventories in ports and significant net coal import. Coal market is increasingly competitive as coal sale has been struggled. Undoubtedly, the mode of chain of survival by Kingho energy can be used as reference for other coal enterprises. (Zhao Zhijiang)