(Yicai Global) Aug. 8 -- Beijing-based coal producer China Shenhua Energy Co. [SHA:601088] has secured the government go-ahead to build a USD2.56 billion (CNY17.15 billion) coal-to-olefins (CTO) plant, and the facility's annual production capacity is projected to be 750,000 tons, The Beijing News reported today.

The company's wholly-owned subsidiary Shenhua Baotou Coal Chemical Co. has received the nod from local development and reform authorities to construct the CTO upgrade demonstration project in Jiuyuan Industrial Park in Baotao in China's north-central Inner Mongolia Autonomous Region, China Shenhua Energy said yesterday.

Total project investment is about USD2.56 billion (CNY17.15 billion), of which 30 percent will be paid as capital base, per the statement.

The facility will produce 350,000 tons of polyethylene and 400,000 tons of polypropylene a year for a total 750,000-ton total annual production capacity.

Shenhua Baotou Coal Chemical broke ground on the CTO plant in 2007. Annual capacity of coal-to-olefins facilities under current operation at the plant is approximately 600,000 tons equally divided between polyethylene and polypropylene.

China's environment ministry suspended the project in January 2013 for violating environmental construction regulations, imposing a fine of USD14,900 (CNY100,000), Shanghai-based newspaper 21st Century Business Herald previously reported, because pollution control facilities at the plant failed to pass the ministry's acceptance check in time.

The exact timetable for start of the CTO upgrade project is still up in the air, the company said.