China boosts coal’s economic value 700% after turning it to liquids: report

China has significantly increased the economic value of coal by transforming it into oil products, as reported by a Chinese newspaper. The expansion of the world's largest coal-to-liquids plant, constructed by China Energy Group Ningxia Coal Industry Co Ltd, began in northwest China's Ningxia Hui autonomous region last month. The facility processed 24 million tonnes of coal in 2025, accounting for a quarter of the region's annual coal output.

This technology has proven profitable for China, which relied on Middle Eastern oil sources before the Strait of Hormuz was blocked by the US-Israel war on Iran. The price of international oil reached over US$100 per barrel, making the conversion of coal to oil highly lucrative.

The report highlights the economic benefits and reduced reliance on imported oil, emphasizing the potential of this technology for China's energy structure. With abundant coal, limited oil, and scarce natural gas reserves, Ningxia relies on coal for over 90% of its energy use. The core technology, indirect coal liquefaction, involves heating coal with oxygen and steam to create a synthetic gas, which is then purified and converted into environmentally friendly oil products low in sulfur and aromatics.

The development of this technology faced numerous challenges, including clogged furnaces, unstable catalysts, and the need for continuous investment. China's government supported foreign firms to license the technology as early as 2004, but negotiations dragged on. In 2009, China achieved a breakthrough with a domestic research project, leading Ningxia Coal Industry to move forward independently.

The facility, spanning an area larger than 650 football fields, has since produced its first drop of qualified oil in 2016 after initial challenges.

The upgraded production line now produces high-end products with improved safety and automation, accounting for 99.8% of processing units operating with automated control. The project serves as a model for China's coal-to-liquids industry, with potential for further advancements in green hydrogen, green electricity, and safer mining practices.