FOREIGN companies that own clean-coal technologies and work with their Chinese counterparts to tap the country's coal reserves may earn good returns as China strives to reduce greenhouse gas emissions and ease its increasing thirst for oil, a high-level official forecast.

"In the coming five years, China will make major advances in the rational use of coal," said Commerce Minister Bo Xilai. "Foreign companies willing to invest in China will gain big profits with small capital."

Bo made the prediction during the first China (Taiyuan) International Coal and Energy New Industry Expo 2007 last week.

Several major foreign companies such as Royal Dutch Shell Plc, South Africa-based Sasol Ltd, General Electric, ABB Group and Siemens AG have worked with Chinese companies to produce electricity and substitutes for crude oil derivatives from coal.

In addition, large coal-to-chemical projects involving US$6 billion in investment are expected to start in China's coal-rich western regions, including Shaanxi and Shanxi provinces, according to local economic planning agencies.

Sasol Ltd, which owns commercially proven coal-to-liquids technology, plans to develop two CTL plants in cooperation with China's Shenhua Ningxia Coal Group and Shenhua Coal Group. The plants will each have the capacity to make three million tons of coal-sourced oil a year.

Shenhua Group, China's largest coal company, has said it will produce the country's first barrel of liquid fuel from coal in 2008 in Erdos, Inner Mongolia, using its own technology known as direct coal liquefaction. a