The two companies will review Lu’An’s coal resources to determine the best resources available for a conventional integrated gasification combined cycle (IGCC) electrical power plant and a coal-to-liquids (CTL) plant (diesel & naphtha).

The companies will also explore the possibility of underground coal gasification (UCG). The process will be aided by the inherent high pressures of depth enabling the liberation of energy contained within the 95% of the world’s coal resources inaccessible by present day mining technology.

Operating commercially in the former Soviet Union at a number of sites for more than 40 years, UCG has also recently been successfully demonstrated in Queensland, Australia.

Lu'An’s major business includes coal, power generation, coking facilities and chemical production. It owns geological reserves of 9 billion tonnes of coal and has an annual coal production capacity of 30 million tonnes.

Shanxi Province is the largest coal producing region in both China and the world, producing 540Mtpa of coal, accounting for 25% of China's coal production in 2005.