Chinese firm invests in Louisiana methanol plant

Louisiana Governor Bobby Jindal Louisiana Governor Bobby Jindal

JULY 21, 2014—A major Chinese chemical company will make a $1.85 billion capital investment in a methanol manufacturing complex on the Mississippi River in Vacherie, La., St. James Parish, according to a joint announcement by Louisiana Governor Bobby Jindal and Yuhuang Chemical CEO Charlie Yao. The project by Yuhuang Chemical Inc., a newly formed subsidiary of Shandong Yuhuang Chemical Co. Ltd., represents the first major foreign direct investment by a Chinese company in Louisiana.

The methanol manufacturing facility is expected to create 400 new direct jobs and another 2,365 new indirect jobs, according to the Louisiana Economic Development Corporation (LEDC). At peak building activity, Yuhuang Chemical estimates the project will generate 2,100 construction jobs. Construction will begin in 2016, with the first phase of the methanol project beginning operations by 2018.

GNO Inc. President and CEO Michael Hecht says, “This is a major announcement for a number of reasons: One, it is the first announcement of a major mainland China chemical company investment in Louisiana history; second, it is over 2,700 total jobs; and third, the average salary for the direct jobs is $85,000, plus benefits. Finally, this heralds a new chapter for investment in Greater New Orleans, as we begin to develop and benefit from promising relationships across Asia.”

Citing recent deals with South Africa’s Sasol and Austria’s Benteler Steel/Tube, Governor Jindal says the state continues “to raise the bar for attracting high-quality, world-class foreign direct investment projects. Foreign direct investment projects add great value to our state by creating high-paying jobs, increased levels of international trade and extraordinary career opportunities for the families of Louisiana. It’s no accident that we now have a record-high number of people working in Louisiana and companies from around the world continue to make huge investments in our state.”

One of China’s leading chemical companies, Shandong Yuhuang Chemical recorded more than $4 billion in 2013 sales and employs more than 5,600 people worldwide.

Yuhuang Chemical has secured an option to purchase more than 1,100 acres for a three-phase project next to the Plains All-American Pipeline terminal. After the first methanol plant is completed, the company will build a second methanol plant and reach an annual capacity of 3 million metric tons per annum of methanol. A third phase will include a methanol derivatives plant that will produce intermediate chemicals. Most of the project’s methanol will be exported by oceangoing vessels for use in the parent company’s production of downstream chemicals in China, with approximately 20 percent to 30 percent of the methanol to be shipped by barge and rail and sold to North American customers.

“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,” Yao said. “This facility’s location fits well with our strategy to leverage the advantage that natural gas feedstock provides. Our goal is to maximize technology innovation and develop our company into a petrochemical and fine chemical world leader, with an equally important reputation for being a resource-efficient and environmentally friendly global enterprise.”

Yuhuang Chemical has selected China Huanqiu Contracting & Engineering Corp., known as HQC, to complete engineering work for the project. The company has licensed methanol technology from Air Liquide Global E&C Solutions. Hiring will begin in 2015, with employment reaching 200 by 2017 and 400 six years later.

To secure the project, Louisiana offered the company a competitive incentive package that includes two performance-based grants: $9.5 million to be paid over five 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. In addition, the company will receive the comprehensive workforce solutions of LED FastStart, ranked the No. 1 state workforce training program in the country, and Yuhuang Chemical also is expected to utilize the state’s Quality Jobs and Industrial Tax Exemption programs.