Two fu-you coal (oil-rich, tar-content coal) chemical projects underway in Hami, Xinjiang, China, have reportedly entered stable production and trial production stages, respectively. The Xinjiang Xuandong Energy Co., Ltd. project (total investment of 15 billion yuan) located at Naomaohu in the Yiwu Industrial Park began trial production in 2024 and has since entered a stable production stage, while the Xinjiang Zhiguoweiye New Energy Co., Ltd. project (total investment of 6.58 billion yuan) in the Shantanghu Industrial Park of Balikun County completed ignition commissioning in July 2026 and entered trial production. Both projects are notable for linking byproducts such as coal tar to fine chemical and higher value-added new material production.
The Xuandong Energy project is equipped with clean utilization facilities for coal grading and fractionation with a capacity of 10 million tons per year and a hazardous-waste coal tar upgrading facility with a capacity of 500,000 tons per year, applying SE water-coal slurry gasification technology (with a carbon conversion rate above 99%) jointly developed by East China University of Science and Technology and Sinopec, along with its own full-fraction coal tar hydrogenation technology. The Zhiguoweiye project consists of a low-rank coal grading and fractionation utilization facility with a capacity of 6 million tons per year and a coal tar hydrogenation facility with a capacity of 600,000 tons per year, applying a cascade pyrolysis and poly-generation process developed by the Southwest Research Institute of Chemical Industry. This process hydrogenates coal tar to produce diesel and naphtha, extracts LNG (Liquefied Natural Gas) and hydrogen from waste gas generated during the process, and utilizes the byproduct coal pitch as a feedstock for lithium battery anode materials. Through this, both projects are seen as expanding their business scope beyond simple fuel production into fine chemicals and new materials such as secondary battery materials.
The Xuandong Energy project has a total investment of 15 billion yuan, with clean utilization facilities handling 10 million tons of coal per year through grading and fractionation and a coal tar upgrading facility handling 500,000 tons per year. It began trial production in 2024 and is currently in a stable production stage, targeting the establishment of a closed-loop waste recycling operation system by 2026. The Zhiguoweiye project has a total investment of 6.58 billion yuan, comprising a low-rank coal grading and fractionation utilization facility handling 6 million tons per year and a coal tar hydrogenation facility handling 600,000 tons per year. Construction began in July 2024, and ignition commissioning was completed in July 2026, entering trial production. The simple sum of the investment amounts for the two projects is 21.58 billion yuan.
The two projects are interpreted as part of a regional strategy to upgrade Hami’s coal chemical industry by converting fu-you coal resources into higher value-added chemical feedstock rather than fuel-grade coal. Linking coal tar byproducts to lithium battery material feedstock is viewed as an attempt to bridge traditional coal chemical processing with the secondary battery materials industry.
Grading and fractionation utilization technology for fu-you coal serves as a means of improving the economics of low-rank coal, aligning with broader trends of upgrading coal chemical industries in coal-resource-rich regions. In particular, the poly-generation process that converts coal tar byproducts into lithium battery anode material feedstock represents a case where traditional chemical facilities are being linked to secondary battery material supply chains, which may serve as a reference for other coal chemical projects considering similar feedstock diversification strategies. The application of domestically co-developed technology with research institutes and universities in core processes such as gasification and hydrogenation illustrates a shifting competitive landscape amid a broader trend toward technological self-sufficiency, which is relevant for licensors and engineering firms in the sector. This also suggests continued equipment orders for gasifiers, hydrogenation reactors, and other core equipment used in low-rank coal utilization facilities. The fact that both projects have successively entered trial and stable production stages suggests the possibility of follow-on investment in similar projects in the region.
Whether the closed-loop waste recycling operation system targeted by the Xuandong Energy project for 2026 is actually established is the first point to watch. For the Zhiguoweiye project, the timing of the transition from trial production to a normal operating rate, as well as whether sales and supply contracts are concluded for coal pitch intended as lithium battery anode material feedstock, are also of interest. Whether both projects lead to additional capacity expansion or follow-on fine chemical facility investment after reaching stable commercial operation also warrants observation. Trends in similar projects utilizing other fu-you coal deposits in the Xinjiang region are likewise worth watching.