Haike Chemical Group Regulatory News (HAIK)

26 Sep 2008 07:00



HaiKe Chemical Group Ltd.

Production update

Innovative process to utilise by-product Hydrogen 

HaiKe Chemical Group Limited ("HaiKe" or the "Company"), the AIM quoted (AIM: HAIK) petrochemical, speciality chemical and biochemical business based in China, is pleased to announce a technical innovation which will enable it to capture and utilise hydrogen generated as a by-product of petrochemical processing. 

This significant innovation will allow the Company to reduce both the amount of energy used in the production process and the cost of purchasing hydrogen, against a back drop of high crude oil prices.

During the course of petroleum processing, it is necessary to treat the oil being processed with hydrogen in order to improve its quality. The completion of the Company's new 800,000 metric tonne heavy oil catalytic cracking facility has expanded the Company's output of certain higher value products but has also resulted in an increase in the amount of hydrogen used by the Company in this process.

Currently, most of the hydrogen used in petroleum processing is purchased by the Company from external suppliers at the market price.

Hi-Tech Shengli Electrochemical Co Ltd ("Shengli"), a subsidiary of the Company, produces a large quantity of by-product hydrogen during the production process, only a small quantity of which is currently captured and used by Shengli.

Previously, Shengli was unable to store the unused by-product hydrogen and the hydrogen was released safely and in accordance with environmental best practice into the atmosphere. Through the use of high pressure compression, storage and transport technologies the Company is now able to transfer the by-product hydrogen and compress it into a liquid state. This liquid hydrogen can now be used by the Company in its production process, reducing the amount of hydrogen that needs to be outsourced, and consequently reducing the cost of production of the refinery products by RMB22 million per annum. The capital expenditure required of approximately RMB8.8million will be financed by internally generated funds.

The new process for utilising by-product hydrogen described above is fully compliant with the safety and environment regulations in China. 

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