Ningdong, once something of a wasteland in the Ningxia Hui Autonomous Region, is reinventing itself as a modern industrial town. The move follows the discovery of more than 27.3 billion tons of coal beneath its rugged terrain.

Aimed at capitalizing on this wealth of natural resources, the massive 3,500 sq-km Ningdong Energy-Chemical Base has now been constructed in the region. Set just 43 km southeast of Yinchuan, the capital of Ningxia, the construction of the base has been the local government's top priority since 2003.

In September 2008, the State Council, China's cabinet, designated the energy-chemical base as a national-level development project, aiming to establish it as a national coal base, a coal-to-chemicals base and a thermal-power base for the "West to East Power Transmission Project". It was also conceived as an ecological demonstration zone.

A construction start-up ceremony took place in the energy-chemical base on December 15 last year. It highlighted the launch of eight major energy projects -- three power plants, three coalmines, one electricity distribution line and one coal-to-petrochemical plant.

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Zhang Guobao, head of the National Energy Administration told attendees at the event: "These projects, with a combined investment of 40 billion yuan, are an important part of government efforts to develop local resources. They will also help China meet domestic demand."

A number of officials from the National Development and Reform Commission and the Ningxia Hui autonomous region also attended the ceremony.

Ningxia has already pumped nearly 50 billion yuan into the construction of the Ningdong base. Work on several supporting projects has also been completed. These include Asia's largest 750-kV substation and the Yangchangwan Coal Mine, said to have an annual output of 10 million tons.

Other projects include the first-phase of the Linwu power station, a coal tar plant with an annual capacity of 200,000 tons, a coal-to-methanol plant with an annual capacity of 250,000 tons, and a DME (dimethyl ether, a clean-burning hydrocarbon fuel) plant with an annual capacity of 210,000 tons.

The local government has also made great efforts to improve its infrastructure and has now successfully completed a number of high-profile initiatives. These include the successful installation of the Lanzhou to Ningdong power transmission lines, the opening of the Guli Railway and the building of 178 km of new highways. The first phase of the Yazidang reservoir has also been completed, creating a water storage capacity of 178 million cubic meters.

The local government has also adopted a series of policies aimed at attracting investors. These policies include favourable taxes and attractive terms on land use to ensure a rapid development.

Ningdong Energy-Chemical Base

As a result of Ningdong's improved infrastructure and favorable investment program, a number of leading domestic energy companies, including the Shenhua Group and the China Huadian Corp, have begun construction of their plants within the base.

Jiao Hongqiao, the 40-year-old chief engineer of the Shenhua Ningxia Coal Industry Group's propylene plant, said all of the above-mentioned projects are only a small part of Ningxia's ambitious plan to become one of the country's top energy suppliers within 10 years.

By 2020, total investment in the Ningdong area is projected to hit 300 billion yuan. This is part of the local government's plan to create a first-class energy-chemical base with coal, power, coal chemical and new material industry clusters.

According to the plan, Ningdong will have power plants with a total capacity of 16,000 mW annually, coal mines able to produce 130 million tons of fuel a year and coal-to-chemicals plants with an annual capacity of 20 million tons.

According to Yuan Jinlin, head of the Development and Reform Commission of the Ningxia Hui autonomous region, by 2020, the annual GDP of Ningdong will be between 80 and 100 billion yuan, 50 percent more than Ningxia's entire industrial output for 2007.

It is also predicted that the energy base will generate 67 billion yuan worth of industrial added value, 54 billion yuan in related industrial output, and 15 billion yuan of newly-added local government fiscal revenue.

The energy-chemical base is expected to create 750,000 jobs among cities along the Yellow River, as well as speed up urbanization. It is anticipated that around 60 percent of Ningxia people will be city dwellers.