(Yicai Global) May 7 -- Shares in Junzheng Energy and Chemical Group gained after the firm set out plans to invest CNY20.7 billion (USD3.2 billion) in a new production line for degradable plastics in China’sInner Mongolia Autonomous Region.

Junzheng Energy’s stock price [SHA: 601216] ended today 2.6 percent higher at CNY5.95 (92 US cents), after earlier soaring as much as 9.8 percent.

The plant will be built in Junzheng Energy’s home city of Wuhai. It will have a polymerization unit able to produce 2 million tons of degradable plastics a year and production lines for raw materials such as formaldehyde and acetylene used in making chemicals, the firm said in a statement.

Demand for degradable plastics is expected to grow as society becomes more environmentally conscious. Over 10 other chemical companies, including Hengli Petrochemical and Wanhua Chemical, have announced investments in large degradable plastics projects.

Junzheng Energy plans to start work on the first phase of its project this month and expects to achieve half of the total capacity by December 2023.

The Wuhai project will produce a variety of degradable plastics including PBAT, PBS, PBT and PTMEG, and will help promote the development of a green economy. It is expected to bring in average operating income of about CNY16.4 billion a year and profit of CNY3.5 billion (USD542 million) when it reaches full capacity.

Editor: Tom Litting