Synthesis Energy Systems has announced that its 95%-owned joint venture with the Shandong Hai Hua Coal & Chemical Company has obtained key government approvals for the second phase expansion of its existing Hai Hua project in Zaozhuang City of the Shandong Province in China.

The Phase-2 expansion will result in additional production capacity of approximately 17,000 standard cubic meters per hour (scm/hr) of high grade syngas at this site.

After completion of the expansion, the plant will have a design capacity of approximately 45,000scm/hr. The project approvals were issued by divisions of the State Environmental Protection Administration and the National Development and Reform Commission.

With a workforce of over 150 employees, the Hai Hua plant utilizes Synthesis Energy Systems’s (SES’s) exclusively licensed U-Gas technology to convert local low-rank coal, with approximately 40% ash content, into high grade syngas.

The additional capacity from the Phase-2 expansion is expected to support approximately 100,000 tonnes per year of methanol production as well as other gas demands in the Xuecheng Industrial Park.

SES is currently negotiating agreements, including ownership in the methanol facility, with the Shandong Hai Hua Coal & Chemical Company as well as other customers for the additional syngas capacity. SES expects to finalize project terms and begin work on the Phase-2 expansion later in 2008.