Sasol is in talks with China’s biggest coal mining company, Shenhua Group, about building a plant there.

Sasol is in talks with China’s biggest coal mining company, Shenhua Group, about building a plant there.

Sasol spokesperson Johann van Rheede confirmed that the two companies were "in exploratory talks." However, these were still at an early stage and feasibility studies had not been conducted yet.

"In principle, we are very interested in the Chinese market," Van Rheede told but added that Sasol was also in negotiations with other coal-rich but oil-poor countries.

Many motor manufacturers have already realised the opportunities presented by the Chinese market as more and more people are purchasing vehicles there. With almost one-and-a-half billion people, it is deduced that given the rate at which cars are being acquired in China, its motor industry could be as large as that of the US in 25 years’ time.

China is the world's largest coal miner and consumer, and has encouraged experiments in turning this commodity to oil in an effort to help reduce its reliance on fuel imported from the Middle East.

The first phase of the R24,4 billion rand plant was projected to have a capacity to produce three million tons of fuel a year, Wen Xinsheng, deputy general manager of the Beijing-based coal-to-oil unit, Shenhua, said.

Wen also said Shenhua was in discussions with other companies as possible partners.

A Chinese coal analyst, Yang Zhisan, said that while South Africa had been successful in converting coal to fuel, the technology was secret and technical problems had slowed China’s efforts to mimic it.

"If Sasol agrees to co-operate with Shenhua, the South African company will want a large share in the venture," Yang said.

However, Wen did say that talks between the parties had raised many uncertainties which could affect the timing of the project.

Original article from Car