Chinese could spend up to $3 billion on St. James methanol project

By April 11, 2017August 16th, 2018Methanol Market, US Methanol

By Richard Rainey, | The Times-Picayune

April 11, 2017 at 4:29 PM, updated April 11, 2017 at 4:49 PM

Construction of the Yuhuang Chemical methanol manufacturing plant in St. James Parish is underway. (Bim)

On the heels of promises from one Chinese chemical company to build a plant in Louisiana, another said its even larger multi-billion project is underway.

Yuhuang Chemical Inc. began to turn dirt on its 1,300-acre site in St. James Parish on Jan. 9, clearing the way for the first of three construction phases of a methanol manufacturing plant. Phase I, originally thought to cost $750 million, has risen to an estimated $1.2 billion to build, said Jerry Jones, Yuhuang’s general counsel.

While Jones was hesitant to deliver a hard figure, he said the final construction costs could rise from the initial $1.85 billion estimate to possibly as high as $3 billion, making it by far the largest Chinese investment in Louisiana’s chemical manufacturing industry.

“The engineers underestimated the cost of building the project in the United States,” Jones said. “Fortunately the company felt it was worth it.”

The second largest, a $1.12 billion manufacturing site from Wanhua Chemical Group, was announced Monday (April 10).

Yuhuang bought the necessary acreage in July. Public concern over air pollution from the future plant prompted the company to ask the Environmental Protection Agency for a modified air permit that had tighter restrictions on certain pollutants. The agency sent its directives to the Louisiana Department of Environmental Quality on Aug. 31.

LDEQ delivered its proposal in December and held a public comment period in January. That final permit is expected to be issued soon, said Bryan Johnston of LDEQ’s air quality division. The modified permit, however, wasn’t necessary to start construction. The current permit remains valid, Johnston said.

Jones said Yuhuang expects the first phase of the methanol plant to take about three years. St. James residents should soon see construction of a road for heavy trucks and equipment that will stretch from Louisiana Highway 3127 to River Road.

Paying for the first phase will be a syndicate of banks, including the government-affiliated Bank of China, and Yuhuang’s parent company, Shandong Yuhuang Chemical Co. Ltd., Jones said.

Jones lowered the original projections for jobs at the plant once its first phase was operational from 200 to somewhere between 95 and 100. He said average salaries would still hover around $85,000 a year.

Construction of Phase 1, however, could employ as many as 1,200 workers.

“We want to hire in the St. James region,” Jones said. “And then we want to be a part of the community. It’s part of the social culture of this group that’s being built in America is that we want to support the local community as best we can.”

Jones also sought to temper concern that the recent rash of deaths of workers at chemical plants in China would not translate to unsafe conditions along the Mississippi River.

“I think the difference is that we’re building this facility in the United States and we’re building this to United States code and to United States standards,” Jones said, adding that the plant would adhere to stricter American labor laws. “The fact that this is a Chinese-owned company has no impact on the type of facility we’re building.”