Annual Output of 210,000 Tons of Polylactic Acid Project

Annual Output of 210,000 Tons of Polylactic Acid Project of Chancghun City

 

1. Introduction to the Project

1.1 Project Background

1.1.1 Product Introduction

Polylactic acid (PLA) is a new type of polyester material produced with organic acid as raw material. Its performance is better than the existing plastic of polyethylene, polypropylene, polystyrene and other materials, and is defined as the industry's most promising new packaging material in the new century. It is a star in environmentally friendly packaging material, and is expected to replace polyethylene, polypropylene, polystyrene and other materials used in plastic products in the future. Its application prospect is broad. 

Polylactic acid, with its unique features of renewable resources, completely biodegradable and biocompatible, has been hailed as the century's most promising bio-chemical synthetic polymer of new green material. Polylactic acid materials industry is mainly carried out in the packaging material of polylactic acid, polylactic acid fiber material, polylactic acid engineering plastics and polylactic acid medical material four aspects. At present, significant achievements have also been achieved in downstream product market development and applications.

1.1.2 Market Prospects

The application scope of polylactic acid product is very broad. Depending on the different use, it can be polymerized into material with a variety of different molecular weights, and the highest is up to several million molecular weights. In modern biological pharmaceutical industry, drug particles that release capsules, artificial bones, artificial skin, surgical bone screws, surgical sutures etc. polylactic acid products have been widely used.

Foreign market situation: The U.S. Natureworks Company that produces PLA has cooperated with Japanese Kanebo, Japan You Jika, and Japan Kuraray etc. to establish PLA fiber continuous production line. The spinning method is similar to traditional polyester or nylon, and the main products are long silk, spun yarn and blended yarn. In 2005, China's demand for polyester filament reaches about 5 million tons. Assuming that PLA fiber can replace 1% of polyester filament, there will be 50,000 tons; if replacing 3%-5%, there will be 150,000-250,000 tons.

Domestic market situation: China's current production of polyethylene is about 12 million tons, and the polyethylene demand in our country in 2006 will reach nearly 20 million tons, thus China's polyethylene production still has 40% supply gap. The current demand for linear low density polyethylene used for packaging material is around 5 million tons, and there will be 3-5 percent growth rate per year. The price of polyethylene depends on the price of ethylene and oil; correlation with ethylene is 100%, and correlation with crude oil price is 90%.

According to experts’ prediction, by 2020, Asia's bio-based polylactic acid resin production capacity will exceed that of North America, ranking the first in the world. It is estimated that the global polylactic acid production capacity will rise from 182,000 tons in 2011 to 721,000 tons in 2020, while China's production capacity is expected to be close to half, more than 350,000 tons.

1.1.3 Technical Analysis

In polylactic acid technology, there are two production technologies in China that are close to industrialization. One is the two-step process cooperated by Changchun Institute of Applied Chemistry and Zhejiang Hisun Pharmaceutical; the other is one-step direct polycondensation technology of Shanghai Tongjie Liang Biomaterials Co., Ltd.

The two-step method is ester propylene rubber ring-opening polymerization method. This method is based on L- lactic acid as raw material, with the presence of alcohol initiator, it is first made into propylene rubber ester, and then ring-opening polymerized into polylactic acid in the presence of a catalyst.

The one-step method is direct polycondensation method. In the role of a catalyst, high quality lactic acid carries out dehydration condensation reaction in reactor; combined with other techniques, it is directly synthesized into polylactic acid with relatively high molecular weight. The advantage of this method is that when the polylactic acid is separated from the reaction mixture, it will be purified. Compared with ring-opening polymerization method, the product does not contain impurities, with thermal stability, lower manufacturing costs, can directly replace ordinary plastic products. The difficulty is that it requires the use of high -quality L- lactic acid.

1.1.4 Advantageous Conditions of Project Construction

（1）Policy Conditions

The project, in addition to enjoying the preferential policies of Wukeshu Economic Development Zone, also enjoys the preferential policies of YushuCity. Meanwhile, it also enjoys the state preferential policies on the relevant environmental protection industry. In order to promote the development of circular economy, improve the efficiency of resource utilization, protect and improve the environment and achieve sustainable development, as well as to build a environment-friendly society, the state has developed a lot of tax incentives on food and agricultural and sideline products processing in order to guide and encourage the development of environmental protection industry.

（2）Location Advantage

Railways, highways, waterways are accessible. Chang-Yu, Ha-Yu railway runs through the area. It also sets two stations of Wukeshu and Liujia; Yu-Tao grade I highway runs through the area, and connects No.102 State Road. The downtown area is only 16km from Jing-Ha highway; it is only 1 hour’s drive from JilinCityAirport, ChangchunLongjiaInternationalAirport and HarbinTaipingAirport; secondly, SonghuaRiver runs across the area, tracing upstream to JilinCity, downstream to Harbin, leading to the border port.

（3）Technical Advantage

This project mainly adopts two-step polylactic acid process. Compared with one-step method, because it has one-step ropylene rubber ester separation technology, the requirement on the quality of L-lactic acid is relatively low. One-step lactic acid process belongs to polymerization of lactic acid ontology, and the requirement on the quality of L-lactic acid is relatively high. Seen from the production cost of polylactic acid, the two-step process is superior to the one-step process.

（4）Human Resource Advantage

The city has abundant human resources and reasonable structure. The former state-owned enterprises have cultivated a large number of management and professional and technical personnel for enterprises to choose. Compared with other regions, Yushu has advantage in high quality labor force at low price. Therefore, it is suitable for the development of labor-intensive industries. There is some basis for labor export, and a number of professional labor forces have been cultivated. In addition, our city has also established technical training base with the research departments, universities of JilinProvince, thus the follow-up knowledge-based workforce is adequate. All the personnel needed in this project are recruited from the whole society through examination.

 （5）Advantage of Industrial Foundation

It is located in the world's three "golden corn belts". Currently, it has 347,000 hectares of arable land, is rich in corn, soybean, rice and other crops, and the annual output of grain maintains at 5 billion kilograms, accounting for 1/180 of the nation, 1/10 of Jilin Province, 1/3 of Changchun City, known as "the first granary in the world". Since 2004, it wins the honor of advanced county (city) in grain production of the country for six continuous years. The liquid glucose, produced by COFCO Biochemical Energy (Yushu) Co., Ltd. invested by Changchun Wukeshu Development zone, provides rich raw material for the project. With flat terrain, the water, electricity, gas supply and communications facilities are good, and transport is convenient.

This product uses the liquid sugar of COFCO Biochemical Energy (Yushu) Co., Ltd. invested by COFCO in Changchun Wukeshu Development Zone to directly produce polylactic acid. It not only can reduce investment, but also can reduce the project construction period, thus the economic benefits are significant.

1.2 Content and Scale of Project Construction

1.2.1 Production Scale and Project Scheme

(1) In the first period, the production scale is 10,000 tons / year;

(2) According to the market outlook and technology and other reasons, ultimately achieve polylactic acid production scale of 210,000 tons / year.

1.2.2 Construction Contents

(1) The project covers an area of ​​250,000 ㎡, with total construction area of 150,000 ㎡, and newly purchased equipment of 780 (sets);

(2) The project is located in the eastern side of the current plant, the reserved land of 250,000 ㎡.

1.3 Total Investment and Funds Raising of the Project

1.3.1 Total Investment of the Project (detailed in table 1)

Table 1：                  Summary Table of Total Investment of Project           Unit: Ten Thousand Yuan

Note: the “Ten Thousand Yuan” in the table is in RMB.

1.3.2 Funds Raising (Detailed in table 2)

Table 2：         List of Funds Raising           Unit: Ten Thousand Yuan

1.4 Financial Analysis and Social Evaluation

1.4.1 Main Financial Indicators (detailed in table 3)

Table 3：                List of Main Indicators for Financial Benefits Forecast            Unit: Ten Thousand Yuan

1.4.2 Social Evaluation

( 1 ) Corn is one of the world's most widely planted agricultural crops in the world. China is the world's second largest producer of corn, and the production is only second to the United States. The construction of large corn deep -processing projects can transform resource advantages into economic advantages, thus becoming the new economic growth point. Especially the project chooses high value-added L- lactic acid, and polylactic acid downstream products, so that companies can get relatively good economic efficiency, thereby also stimulating local economic development .

( 2 ) Construction of the project will digest 600,000 tons of corn per year, equivalent to the yield of 50,000 hectares of land. It will no doubt alleviate the problem of farmers ' difficulties in selling grain to some extent, thus improving farmers' enthusiasm for growing grain. It plays an important role for stabilizing and developing the agricultural economy.

( 3 ) The project’s leading product polylactic acid is a novel biodegradable polymer material. It not only has all the basic features of polymer materials in general , its application characteristics are more excellent, and scope of application is very broad, covering packaging materials, household plastic products, medicine, tissue engineering scaffolds material, fracture fixation materials, surgical sutures, textile fabrics, agricultural film, carpets, and home decorations, etc. Polylactic acid is fully biodegradable. In the role of microorganisms in nature, it can be completely broken down into carbon dioxide and water, therefore there is no harm to the environment, and it overcomes the biggest drawback of traditional petroleum-based chemicals plastics. In the future of intensified oil crisis, it is the first choice for replacing chemical and plastic products. At present, it has become the “fourth class of new material” after metal materials, inorganic materials, polymeric materials. Its product market is very broad.

( 4 ) Polylactic acid has formed corn - L lactic acid - PLA - copolymer blend - everyday product complete cycle of industrial chain. It not only can ease the growing crisis of petroleum resources, and “white pollution”, but also has major strategic significance for China's economic development.

 ( 5 ) Shanghai Tongjie Liang Biomaterial Co., Ltd. is the key technological development unit in lactic acid industry of China. At present, it has had six L- lactic acid patents. Its one-step synthesized polylactic acid possesses a leading position in the international community, and adopting one-step method can reduce the cost. The polylactic acid of Cargill of the United States has achieved industrial production for many years. It is more mature and advanced.

1.5 Cooperation Method of Project

Technical cooperation. Other methods can be negotiated face to face.

1.6 What to be Invested by Foreign Party

The foreign party needs to invest technology and part of capital. Other methods can be negotiated face to face.

1.7 Construction Site of the Project

Changchun Wukeshu Economic Development Zone

1.8 The On-going Condition of Project

The project’s feasibility study report has been completed, and project has been approved.

 

2、Introduction to Partner

2.1 Basic Conditions

Name of Project Undertaker： COFCO Biochemical Energy (Yushu) Co., Ltd.

Legal Address: The intersection of Dongfeng Street (north section of the railway) of Jilin Province Changchun Wukeshu Economic Development Zone and Yu-Tao Grade-one Road

Legal Representative：Yue Guojun（chairman）

Cooperate ownership form：limited liability

2.2 Overview of Project Undertaker

COFCO Biochemical Energy (Yushu) Co., Ltd. is large biochemical company subordinate to COFCO Group. The company is located in Changchun Wukeshu Economic Development Zone of Jilin Province. It covers an area of ​​800,000 square meters. Construction began in June 2006. The total investment of the project is 2.4 billion yuan; stage-one investment is 690 million yuan, annual corn processing and conversion is 600,000 tons. The company is specialized in the development of bio-chemical products, and the production of corn starch, polylactic acid, and other derivatives.

The stage-one project will annually convert and process 600,000 tons of corn, produce 410,000 tons of commodity starch, 97,000 tons of corn fiber feed, 31,000 tons of corn gluten meal, 16,000 tons of refined corn oil, 18,000 tons of corn germ meal. The development direction of the stage two and three project is production and development of L-lactic acid and biodegradable plastics polylactic acid. After completion of the stage three project, it will have 210,000 tons / year production capacity of polylactic acid, and will become the world's largest polylactic acid production base.

The Company is located in the intersection of Dongfeng Street (north section of the railway) of Jilin Province Changchun Wukeshu Economic Development Zone and Yu-Tao Grade-one Road.

COFCO Biochemical Energy (Yushu) Co., Ltd. is subordinate to COFCO Group, and the wholly owned subsidiary of Biochemical Energy Division.

The Company's main products are corn starch, DDGS feed and other ancillary products. In the next step, it plans to launch stage two and three polylactic acid project.

Currently, the company only has cornstarch international advanced production technology, lacks mature production processes and technologies for development of polylactic acid and its downstream products.

Now the company's products are mainly used in the production of beer, liquid sugar, and some for the production of modified starch and exports.

The company currently employs 860 people, including engineering and technical staff of 12 people (eight intermediate titles and four senior titles); there are 22 high, intermediate titles, and the average skill level of employees is 12.

The company now has more than 560 sets of various types of equipment; existing building area is ​​83,000 square meters, and total assets are 870 million yuan; the current production capacity is processing 600,000 tons of corn.

Yue Guojun, general manager, male, native of Kaoshan, Nong’an of Jilin, was born on April 3, 1963. He graduated from the Department of Environmental Engineering of Harbin Institute of Technology, with master's degree. Currently he is the assistant president of COFCO, deputy managing director of COFCO, and general manager of COFCO Biochemical Energy Division. Other social duties include: member of national ethanol fuel Eleventh Five-Year Plan panelists, member of Heilongjiang Branch of the Central Advisory Committee, and adjunct professor of Life Sciences College of Heilongjiang University.

He had worked in Heilongjiang Anderson Long Chemical Co., Ltd., Heilongjiang China Resources Jinyu Industrial Co. Ltd, Heilongjiang China Resources Alcohol Co., Ltd. etc. units. He had served as chief engineer of the Heilongjiang Anderson Long Chemical Co., Ltd., general manager of Heilongjiang China Resources Jinyu Industrial Co., Ltd., and general manager of Heilongjiang China Resources Alcohol Co., Ltd.

2.3 Contact Methods

Postal code：130401

Contact Person of Project Unit：Yan Yan

Tel：+86-431-83827027    18643157577

Fax：+86-431-83827500

E-mail：yyan@cofco.com

Corporate Website：www.cofco.com

 

Contact Person of Economic Cooperation Bureau of Project City (Prefecture)：Lou Huimin

Tel：0431-82715338  13943008496

Fax：0431-82715338

E-mail：cc82715338@126.com

Website of City/Prefecture：http://www.ccmbc.com/