SinoCoking Coal and Coke Chemical Industries, Inc. has broken ground on the construction of its new state-of-the-art coking facility in Pingdingshan city, Henan Province, in east central China. The eventual cost of the new coking plant is expected to be $70 million when completed by early 2011, with the plant being used for the production of metallurgical and chemical coke, as well as coal gas and various chemical products.

The coking of coal involves driving off volatile constituents of the coal, such as water, coal gas, and coal tar, leaving a smokeless form of the fuel, used for such things as smelting iron ore. The new plant promises a more efficient and cleaner coking process. Present facilities have a production capacity of up to 250,000 metric tons per year. By using a broader range of coal inputs, with lower thermal properties, the new facility will have a maximum annual production capacity of 900,000 metric tons of coke. Additional factors could result in an eventual five-fold or more increase in actual coke production and sales compared to current levels. The reduction in the average cost of inputs should also increase the company’s profit margin.

In addition to more efficient coking, the facility will produce other revenue enhancing products. It’s expected to generate an additional 66.5 million kilowatt-hours of saleable electricity from conversion of the heat emitted from the coal-gas powered system used to power steam generators. The facility will also produce purified coal gas as a fuel source for nearby city residents, at a price that is 20% less than the current price of liquefied natural gas. These two byproducts alone could bring in up to $62 million in additional annual revenue. Other possible products include crude benzene (benzol), sulfur, and ammonium sulfate.

SinoCoking Chairman and CEO, Jianhua Lv, spoke of the company’s growth strategy. “We view this as a key step in the implementation of our growth strategy. Power and fuel scarcity, as well as environmental side effects of industrial growth, are key issues in China today. Our new coking facility project helps to address these issues, and that is why our project is strongly supported by our local and provincial governments. Furthermore, the completion of this project would enable us to produce our coke products with even greater efficiency, and will provide expanded revenue opportunities to SinoCoking. We look forward to the completion of this project, to further solidify our leadership position in the regional market.”

SinoCoking began producing metallurgical coke in 2002, and has expanded to become an important supplier of coke to regional steel producers in central China, as well as to power plants and manufacturers. It uses coal from both its own mines and that of third-party suppliers.