The International Finance Corporation (IFC), the private sector arm of the World Bank Group, signed a financing package for China’s Xinao Group to support a coal-to-liquids project.
IFC is investing in a Xinao subsidiary—Xinneng Chemical—by buying shares worth up to $10 million and granting a $40 million loan for the plant that will convert coal into dimethyl ether (DME). The project will be one of the world’s largest producers of DME from coal and is expected to come online in 2009.
Xinao asked IFC to arrange the full debt package needed for this project, which, in addition to IFC’s financing, includes a loan of up to $140 million from commercial banks.
Xinao will build petrochemical facilities with a total production capacity of 600,000 tons per annum (tpa) of methanol from coal, which will then be used to produce about 400,000 tpa of DME. The project utilizes China’s coal reserves in Inner Mongolia.
There are several other DME projects underway in China. Japan’s Toyo Engineering, for example, is designing and building a 210,000 tps coal-to-dimethyl ether (DME) with the Ningxia Coal Group in northwestern China’s Ningxia Hui Autonomous Region. (Earlier post.)
DME can serve as a synthetic fuel that is to diesel what LPG is to gasoline. It is gaseous at ambient conditions but can be liquefied at moderate pressure. With a high cetane number, DME has very attractive characteristics as an alternative fuel for diesel engines. DME can be blended with LPG in a 15 to 20% blend without any modifications to equipment or used as a replacement.
The Chinese government is supporting the development of DME as a possible alternative to diesel. (Earlier post.)
Although the Xinao project will use a two-stage process that converts the coal-derived syngas to methanol, and then dehydrates that to produce DME, some companies—such as Total and JFE—are working on a more efficient, one-step process for the direct synthesis of DME from syngas.
Dimethyl Ether (Total)