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In recent years, Shanxi Jincheng's coal chemical industry has experienced a surge of rapid development, entering what many call the "great leap forward" era. This has attracted massive domestic and foreign investments, with numerous companies eager to get involved in the region’s booming coal chemical sector.
Recently, several major projects have been launched or announced. For instance, Shandong Jiuji Chemical Co., Ltd. and Shanxi Jincheng Orchid Group jointly started construction on a 1.5 million ton methanol and 1 million ton dimethyl ether plant, with a total investment of 4.5 billion yuan. Meanwhile, China Shipping Chemical signed an agreement worth $580 million for a facility producing 600,000 tons of synthetic ammonia and 1.04 million tons of urea annually. Additionally, China Overseas Chemical and Orchid Group agreed to invest $260 million to build a plant with an annual output of 300,000 tons of synthetic ammonia and 520,000 tons of urea. Altogether, these deals amount to $840 million, signaling strong interest in the region.
However, these are just small steps compared to the grander plans. One of the most significant projects is a $3.38 billion joint venture between Orchid Group, Hong Kong Huaming Group, Foxconn Technology Group, and Indonesian Golden Paper (China) Investment Co., Ltd. This project aims to produce 600,000 tons of polypropylene, 1 million tons of dimethyl ether, and 100,000 tons of polyformaldehyde annually—three key coal chemical products.
Over the past few years, the influx of large-scale coal chemical projects has led to a continuous flow of social capital into Jincheng’s coal chemical industry. Industry experts believe this trend is driven by multiple factors. First, the national government has raised the entry barriers for coal chemical projects, making it difficult for local companies to handle the high capital and technological demands. This creates opportunities for foreign investors. Second, Shanxi has been actively transforming its economy, shifting from raw coal extraction to deeper coal processing. The provincial government encourages both domestic and foreign investment in the sector, pushing major coal companies away from simple coal mining toward more advanced chemical production.
According to Jincheng Mayor Xia Zhengui, the city's resource advantages play a crucial role in attracting foreign capital. As China's largest anthracite coal base and a major source of fertilizer raw materials, Jincheng supplies over 70% of the nitrogen-based fertilizer industry. Investing here offers higher profitability compared to other regions. Some experts argue that even if other coal chemical projects fail, Jincheng remains a safe bet due to its cost advantages.
For example, in the nitrogen fertilizer sector, coal typically accounts for 35-40% of production costs. With rising coal prices and excess capacity, cost reduction becomes essential. A urea plant in Jincheng can save on transportation and local fees, increasing profit per ton by over 300 yuan compared to other regions.
Moreover, with soaring global oil prices, coal-based production has become more competitive. Jincheng benefits from relatively low industrial electricity rates, lower energy consumption costs, and abundant water resources. Its average annual rainfall reaches up to 1,000 mm, which is comparable to southern China. This helps offset water shortages in northern regions.
Additionally, under the new Road Traffic Law, increased freight costs due to weight restrictions could raise production expenses. However, Jincheng’s proximity to railway lines provides a cost-effective transportation advantage for exporting chemical products.
With favorable policies, rich natural resources, and economic incentives, Jincheng continues to attract substantial investment. When asked about risks, investors remain confident, stating that even in a competitive market, Jincheng’s enterprises would be among the last to suffer. Over the past four years, Jincheng has signed hundreds of agreements worth over 100 billion yuan and more than $6 billion in investment commitments.
Looking ahead, the city aims to become the world’s largest coal-based high-concentration nitrogen fertilizer base and a key coal chemical hub. It promises significant business opportunities and returns for both domestic and international investors.
October 08, 2025