Companies

Resources to fuel Zhongtai growth

By Wan Zhihong and Liu Yiyu (China Daily)
Updated: 2010-08-17 14:51

URUMQI - Xinjiang Zhongtai Chemical Co, a chemical raw materials producer based in Urumqi, is eyeing the rich natural resources in the autonomous region for further expansion.

The company, which mainly produces polyvinyl chloride (PVC) resin and caustic soda, plans to expand its portfolio into areas including the coal-to-chemical business, said Fan Xuefeng, deputy general manager of Zhongtai Chemical.

The company has bought the development rights of a coalmine block covering 248.6 sq km and started exploration work on it. In addition, it has also got salt mine assets and lime mines, he said.

"Resource-based industries, like the coal-to-chemical sector, would be another growth engine for our company," said Fan.

One major task for the company is how to use these resources "efficiently and environmental friendly", he added.

The company's move into those areas is in line with the central government's decision to further boost the economy of Xinjiang, he said. "I believe sectors like coal-to-chemicals, which supplies raw materials to many industries, will also get a boost here because of the region's rapid economic growth."

Under the policies of central government, domestic enterprises will play a major role in the country's coal-to-chemical industry, which also offers Zhongtai Chemical many opportunities.

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Fan said it is natural for the company to enter resource industries, as the manufacturing of chemical products needs a lot of coal and other resources.

"With those resources in hand, we can not only diversify our portfolio but also greatly reduce our costs," said Fan.

Having a wide range of natural resources is also a major advantage for the company while competing with its counterparts in eastern parts of China, said Fan.

At present a large part of the company's products are for eastern regions. Some of its products are also exported to Central Asian countries, Southeast Asia, Russia and Africa.

Analysts said that Zhongtai Chemical's strategy is in line with the development of China's chlor-alkali industry. China's key chlor-alkali companies have increasingly integrated resources such as coal, calcium carbide, crude salt and electricity.

Consolidation in the industry, including the manufacturing of electricity-alkali, salt-alkali and calcium carbide-PVC is also under the way, they added.

Zhongtai Chemical will add 360,000 tons of PVC resin and 300,000 tons of caustic soda to its manufacturing capacity this year, as it expects prices and demand to rise.