In view of its huge development potential, more and more foreign companies have been showing a keen interest in entering China's coal industry.

At the China (Taiyuan) International Coal & Energy New Industries Expo 2007, many foreign companies have showcased their projects or objectives in the nation.

Asian American Coal Inc (AACI), comprised of some US energy firms and financial institutions, has set up two joint ventures to develop Shanxi's coalmines.

In July, the Shanxi Provincial Coal Industry Bureau gave a production license to one of AACI's joint ventures, Shanxi Asian American-Daning Energy Co, to develop the Daning coalmine.

The production license will enable the joint venture to develop the mine, projected to have an annual production capacity of 4 million tons. Total investment in the project is US$230 million.

Michael Cosgrove, CEO of AACI, said the company received approval because of its expertise in the coal industry, as well as its longstanding interest in China's coal sector.

AACI has also set up another joint venture to develop the Gaohe coalmine in Shanxi with an investment of US$300 million. It expects to get a production license in 2009 for an annual output of 6 million tons, said Cosgrove.

Apart from the upstream coal production business, foreign companies have also shown interest in downstream works like the coal-to-chemical business. South Africa-based Sasol, a world leader in producing fuel from coal, has joined hands with Shenhua Group to set up two coal-to-oil plants using the former's technology.

The two coal liquefaction projects, one in Yulin in Northwest China's Shaanxi Province and another in Northwest China's Ningxia Hui Autonomous Region, will each produce 3.6 million tons of oil a year.

The total investment in the two projects will be between US$10 billion and US$14 billion. Construction will likely begin in 2013.

The technique of coal liquefaction has drawn increasing attention in recent years as international oil prices have shot up. The Shenhua project is thus of great importance to China both in terms of energy safety and economic development, according to Chen Liming, executive vice-president of Sasol China.

China's increased emphasis on energy conservation and environmental protection provides many foreign companies with the opportunity to bring their advanced technologies and solutions to the nation, said William Mark Hart, president of the Canada-based West Hawk, at the expo.