China-based Yuhuang Chemical will make a $1.85 billion capital investment in a world-scale methanol manufacturing complex on the Mississippi River in St. James Parish, Louisiana, with plans to create 400 jobs.
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 Louisiana.
One of China’s leading chemical companies, Shandong Yuhuang Chemical’s newly formed Yuhuang Chemical subsidiary will make its first major U.S. 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 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,” Yuhuang Chemical CEO Charlie Yao. “While the company has long been highly regarded in China as one of its primary contributors to the industry in Asia, this Louisiana operation represents the company’s commitment to significance on the world petrochemical platform. Louisiana was the right choice for our company to locate our first operation in the United States. 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 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.
Louisiana Economic Development began discussing the potential project with Yuhuang Chemical 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.
“Greater New Orleans Inc. is very proud to have played an integral role in bringing Yuhuang Chemical to St. James Parish,” GNO Inc. President/CEO Michael Hecht said. “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.”