China Shenhua eyes parent's coal conversion mill -paper

SHANGHAI, June 25 (Reuters) - China Shenhua Energy Co Ltd (601088.SS)(1088.HK) will consider buying its state-owned parent's coal-to-liquid plant, the China Securities Journal reported on Thursday, citing the company's board secretary.

"Once the project's prospect is certain, the listed company will take it over and boost the facility to 5 million tonnes that the government approved," Huang Qing was quoted as saying at an investment conference.

Its parent company, Shenhua Group, China's largest coal producer, will begin a 1,000-hour project trial in July to collect operation data, Huang said.

The coal-to-liquid plant, located in Inner Mongolia, went through a successful trial run earlier this year, producing naphtha and diesel, among other products.

China last year suspended all but two coal-to-oil projects because of high investment risk.

China, the world's largest coal producer and consumer, a few years ago began encouraging coal-to-oil projects to help ease its dependence on imported crude oil.

Shenhua Group plans to invest more than 400 billion yuan over the next decade in facilities to convert coal to oil, methanol and gas, the official Xinhua news agency has reported.

The group's target is for capacity to convert 100 million tonnes of coal into about 30 million tonnes of oil and chemical products by 2020, Xinhua said. (Reporting by Alfred Cang and Ken Wills)