Yuhuang Chemical to invest $1.85 billion in Louisiana methanol project

Yuhuang Chemical Inc., a newly formed subsidiary of Shandong Yuhuang Chemical Co. Ltd., plans to invest $1.85 billion in a world-scale methanol manufacturing complex on the Mississippi River in St. James Parish, La.

The company has secured an option to purchase more than 1,100 acres for the three-phase project next to the Plains All-American Pipeline terminal, where Yuhuang Chemical intends to build two methanol plants with a combined capacity of 3 million tonnes/year and a methanol derivatives plant to produce intermediate chemicals.

The company says most of the complex’s methanol will be exported by oceangoing vessels for use in Shandong’s production of downstream chemicals in China, with 20-30% of the methanol to be shipped by barge and rail and sold to North American markets.

Construction on the complex is slated to begin in 2016, with the first phase of the methanol project beginning operations by 2018.

China Huanqiu Contracting & Engineering Corp. (HQC) will conduct engineering work, and Air Liquide Global E&C Solutions will provide licensed methanol technology. Yuhuang Chemical says hiring will begin next year.

Louisiana Economic Development estimates the project, which marks the first major foreign direct investment by a Chinese company in Louisiana, will result in 2,700 jobs for the state. Shandong Yuhuang recorded more than $4 billion in 2013 sales and employs more than 5,600 people worldwide.

“Building a new world-scale methanol unit in Louisiana is Shandong Yuhuang’s first major step in becoming a global player in the petrochemical industry,” said Charlie Yao, Yuhuang Chemical chief executive officer.

“Louisiana was the right choice for our company to locate our first operation in the United States," he added. "This facility’s location fits well with our strategy to leverage the advantage that natural gas feedstock provides.”

In its effort to secure the project, the state offered Yuhuang Chemical an incentive package that includes $9.5 million to be paid over 5 years beginning in 2017 to offset infrastructure costs of the project; and $1.75 million to be paid over 10 years to partially defray the costs of necessary riverfront access and development.

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