CHEMICAL giant Hengli plans to make clothes out of coal. It may sound like something from ancient alchemy, but the privately-owned Chinese company surprised industry watchers when it said it was getting into mining with a US$20 billion project to convert coal into polyester yarn, used in clothes, packaging and plastic bottles.

The announcement was intriguing. Coal is not a typical raw material for polyester and Hengli’s plan will be the world’s first of its kind in the coal-to-chemical sector, where investment so far has totalled US$85 billion according to the China Petroleum and Chemical Industry Federation.

It also comes after Hengli borrowed heavily to set itself up as an oil refiner, using crude to make polyester.

The project, which Hengli aims to have running by the end of 2025 in Shaanxi Province, will add Hengli to a roster of Chinese companies, including coal miner Shenhua Group and oil refiner Sinopec, which have moved into the coal to chemicals business.

“By picking Hengli, the country’s largest polyester producer with extensive reaches to the consumer textile market, it will help Shaanxi Province efficiently develop its rich coal resource and grow the local economy,” said Zhu Fang, senior researcher at the China Petroleum and Chemical Industry Federation.

Hengli, as one of the world’s largest polyester yarn producers, also stands a better chance of getting regulatory approvals for its plan, according to analysts.

Officials from Yulin City, Shaanxi where Hengli plans to base its coal-to-polyester operations, approached the company first with the idea of setting up a plant there, according to company spokesman Li Feng.(SD-Agencies)