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For companies interested in investing in the west, perhaps these are all opportunities - a series of puzzles for Xinjiang Balikun
A recent report submitted by the Economic and Trade Bureau of Balikun Kazakh Autonomous County in Xinjiang to national authorities has highlighted significant challenges facing the region's chemical industry, particularly its sodium sulfide production sector. As one of China's three major sodium sulfide production bases, Balikun is home to numerous chemical companies struggling with various developmental issues. These firms are seeking support from mainland enterprises as they look for ways to improve their competitiveness and sustainability.
Balikun is known as the largest inorganic salt chemical base in Xinjiang. Since the establishment of the first chemical plant in the 1960s, the inorganic salt industry has grown over four decades. However, throughout this period, the industry has consistently faced a number of persistent problems.
One key issue is the outdated production methods used by many local companies. Most still rely on the carbon reduction method to produce basic sulfuric acid, rather than more advanced techniques such as the hydrogen sulfide method or gas reduction process. This results in lower efficiency and higher costs compared to modern alternatives.
Another challenge is the small scale of operations. Some companies operate with just a single converter, while even the largest have no more than nine. The limited product diversity, high operational costs, and difficulties in transportation and distribution put these firms at a disadvantage when competing with sulfur sulfide producers in mainland China.
Additionally, the industry is highly fragmented. Chemical companies are spread along a 15-kilometer stretch of Lake Balikun's shoreline. Each company operates under different brand names, leading to inconsistent product quality and inefficient resource allocation. Without proper clustering, the industry fails to benefit from economies of scale.
The environmental situation is also deteriorating. Lake Balikun, which covers nearly 100 square kilometers, is shrinking due to climate change, reduced snowfall, and increased water usage by agriculture and livestock upstream. Wells around the lake are being overused, and the lake itself is disappearing. If this trend continues, the chemical industry in Balikun could face a severe shortage of raw materials.
Environmental pollution is another growing concern. Emissions from the chemical plants near the lake include 420,000 tons of sulfur dioxide, 42,000 tons of dust, and 70 tons of hydrogen sulfide annually. For every ton of alkali produced, approximately 200 kg of waste residue is generated, resulting in over 1 million tons of accumulated waste in the area.
Moreover, there is a lack of skilled professionals. Most workers come from rural areas and lack formal training. Management and technical expertise are scarce, further limiting the industry's potential for growth and innovation.
The report calls on mainland investors interested in western development to establish stronger connections with Balikun’s chemical companies. It emphasizes that while the region faces significant challenges, these obstacles also represent opportunities for mainland enterprises to invest, innovate, and contribute to sustainable industrial growth.