June 27, 2017
Volume 7 Issue 3
Fujian to Host New Chinese Rerefining Process
Fujian Jinrong Energy Technology broke ground on a base oil rerefinery that will use proprietary technology co-developed by the firm and Chinese partners.
Jinrong said it developed a new distillation process for rerefining waste oils along with Anhui Guo Fu Lubricant Industry Co. and a state-backed research and development firm. “One key technology [involved in the process] is two-way NMP [n-methyl-2-pyrrolidone] solvent extraction, which largely reduces pollution,” Shen Hong, project manager at Jinrong, told Lube Report Asia. “It will greatly improve efficiency and productivity.”
According to Jinrong, the first stage of the rerefinery – which, with a proposed capacity of 300,000 metric tons per year, would be the world’s largest – will begin operating by year-end. The site for the ¥1.8 billion (U.S. $263.6 million) plant in Lianjiang county, Fujian province, will also house a 150,000 t/y blending facility that will use at least some of the rerefinery’s output to produce marine and industrial lubricants, Shen said.
The company considered licensing foreign rerefining technology for the project before deciding to develop its own process, Shen said, noting that cost was not the only factor. “Foreign technologies are simply not suitable in this sector of China.”
For example, there is no official system of classification for spent oils in China. Also, Chinese drivers typically change their automotive engine oil after 15,000 or 20,000 kilometers, compared with about 10,000 km in developed countries. “Recycled oils in China contain much more impurities than in the West, which could clog pipes in foreign-made facilities,” Shen elaborated.
A July 2016 study by United States-based consultancy Kline and Co. found that rerefiners in developing countries including China often have difficulty collecting waste oils.
North American rerefiners typically collect used oils from independent automotive workshops and large industrial lube users. The collection businesses, which rerefiners frequently own, operate on both long- and short-term contracts. In Western Europe, some countries place extended producer responsibility on lube manufacturers to ensure their products get recycled. Others have government collection agencies.
But spanning various collection schemes and refinery sizes, operators around the world have expressed that at times, securing a steady supply of regional waste oil suitable for rerefining is one of the most challenging aspects of the business.
Shen said that’s true, but Jinrong has a solution. “We will sign contracts with major regional lube recycling companies to secure our feedstock supply. We are optimistic about our business.”
Jinrong is a young, private company, but Shen is confident that it can secure contracts because the project has been highlighted by the Ministry of Environmental Protection. “That’s why we could get loans,” Shen added, referring to the fact that state-owned banks have notoriously denied Chinese small- and medium-sized enterprises’ loan applications over concerns of their risk for default.
Aiming to develop its green economy and make the best use of resources, China included recycling in its 13th Five-Year Plan (2016 to 2020).
According to Kline, China’s rerefining sector does indeed hold opportunities for foreign players. For one, China lacks Group II rerefined base oils. For another, the market is fragmented, presenting opportunities for acquisitions and consolidations. However, the country’s used oil quality and its regulations on handling used oil, which it considers hazardous waste, present major challenges to growth.