World's largest coal-to-liquids plant begins full operations in China

The world’s largest coal-to-liquids plant is turning coal into oil products that can power rockets and serve as machine lubricants while boosting its value sevenfold, according to a Chinese newspaper.

The production line, built by China Energy Group Ningxia Coal Industry Co Ltd, began full operations in northwest China’s Ningxia Hui autonomous region last month and processed 24 million tonnes of coal in 2025 – a quarter of the region’s total annual output, according to a report published by Science and Technology Daily on Wednesday.

The technology has been a boon this year for China, which sourced more than 40 per cent of its crude oil from the Middle East before the Strait of Hormuz was blocked by the US-Israel war on Iran.

At one point, international oil prices rose above US$100 per barrel, making turning coal into oil a very profitable business. According to the report, the project has not only generated substantial economic returns, it has also helped to reduce reliance on imported oil.

China’s energy structure has long been defined by its abundant coal, limited oil and scarce natural gas reserves. In Ningxia, coal accounts for more than 90 per cent of the region’s energy use.

The facility’s core technology – known as indirect coal liquefaction – involves heating coal with oxygen and steam to turn it into a synthetic gas of carbon monoxide and hydrogen.