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World Bank Supports Chinese Coal to Dimethyl Ether Project

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.




Coal to liquids are just another nail in the coffin in which the planet is being buried. China is using this so that they can continue full steam ahead in making the automobile the centerpiece of their economy. From an oil perspective, it is prudent. Unfortunately, yet another nation is sacrificing the planet so that they can develop an easy motoring society.


If we are going to get sane about this, we are going to have to have a trade embargo on China until it reverses course on this and all the other accelerations of coal consumption.


A trade embargo is unlikely. China buys too many of our T bonds, so we can finance our budget deficits.

Cheryl Ho

China is already most advanced in commercial use of DME as a mixture with LPG. China is mainly interested in DME production from their own coal resources as national policy. South Korea is also interested in DME. As KOGAS is predominant in handling gas in South Korea , MOU for market study in South Korea has been signed between TOTAL and KOGAS quite recently. Their interest of DME is for LPG market as well as fuel for diesel trucks.

If you would like to know more on the latest DME developments, join us at upcoming North Asia DME / Methanol conference in Beijing, 27-28 June 2007, St Regis Hotel. The conference covers key areas which include:

DME productivity can be much higher especially if
country energy policies makes an effort comparable to
that invested in increasing supply.
National Development Reform Commission NDRC
Ministry of Energy for Mongolia

Production of DME/ Methanol through biomass
gasification could potentially be commercialized
Shandong University completed Pilot plant in Jinan and
will be sharing their experience.

Advances in conversion technologies are readily
available and offer exciting potential of DME as a
chemical feedstock
By: Kogas, Lurgi and Haldor Topsoe

Available project finance supports the investments
that DME/ Methanol can play a large energy supply role
By: International Finance Corporation

For more information:


Wish for more info on DME as fuel in India

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