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25 min ago 2 min read
Industrial gas major Air Products has sold one of its two underperforming coal gasification projects in China for over $250m, as it seeks to exit a second facility following prolonged customer payment disputes.
The firm completed the sale of its Jiutai project in Hohhot, Inner Mongolia, around the start fiscal 2027, while the disposal of its Debang facility in Jiangsu province remains subject to arbitration.
Debang also contributed to its wider in its full-year results, cutting its operating income to $23m.
Speaking on Air Products’ Q4 earnings call, CEO Eduardo Menezes attributed the problems at both facilities to commercial disputes rather than weaknesses in the Chinese coal gasification market.
“The coal gasification is going very strong in China right now,” he said. “The issue that we had in… both assets were the quality of the counterparts that we had and a history of [a] very complicated relationship in payments.”
Menezes said the Debang write-down was prompted by accounting restrictions on how long the company could continue classifying the facility for sale. Air Products now expects to complete the disposal once arbitration proceedings conclude.
Air Products’ wholly-owned Jiutai project was slated to cost $650m to construct, while the Debang project, 80%-owned by Air Products and 20% by China’s Jiangsu Debang Chemical Industrial Group Company, was priced at $250m.
Both facilities came online in 2023, and each uses coal gasifiers to supply purified syngas back to the plant for a fixed monthly fee from the customer based on agreed volumes.
Air Products previously disclosed that the two projects in fiscal 2023 and 2024 that are weighing on its Asian operations.
However, Menezes said the firm has no plans to change its position at Lu’An, its third and largest coal gasification asset in China, which is currently running above nameplate capacity.
The company does not expect collections associated with those assets to recur in fiscal 2027 as it completes its exit.
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