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  July 18th, 2014 | Written by

China to Invest in Louisiana Methanol Plant

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Vacherie, LA – China’s Yuhuang Chemical CEO has said it will inject a $1.85 billion capital investment in a methanol production complex on the Mississippi River in Louisiana’s St. James Parish.

The project by Yuhuang Chemical Inc., a subsidiary of Shandong Yuhuang Chemical Co. Ltd., represents the first major foreign direct investment by a Chinese company in the state.

Announcement of the investment was made this week by Louisiana Gov. Bobby Jindal and Yuhuang Chemical CEO Charlie Yao.

More than 400 new direct jobs, with an average annual salary of $85,000 plus benefits, and an additional 2,365 new indirect will be created, according to the Louisiana Economic Development (LED).

Construction will begin in 2016, with the first phase of the methanol project beginning operations by 2018.

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 of methanol per annum. 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.

“Following such historic foreign direct investment projects as Sasol in Southwest Louisiana and Benteler Steel/Tube in Northwest Louisiana, our state continues to raise the bar for attracting high-quality, world-class foreign direct investment projects,” said Jindal.

Discussions on the project between the LED and Yuhuang Chemical began in February 2014.

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.

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

Its newly formed Yuhuang Chemical subsidiary will make its first major US investment in St. James Parish, where it has secured an option to purchase more than 1,100 acres for a three-phase project next to the Plains All-American

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.

Foreign direct investment projects, said Jindal, “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. Our efforts reforming government, lowering taxes, and improving our state’s business climate are paying off.”