China's first direct coal-to-oil plant will start operation next year, with the industry's production capacity rising to 50 million tons in 12 years, the country's largest coal company has said.

The project under Shenhua Group is based in Erdos in North China's Inner Mongolia Autonomous Region. Almost 95 percent of the project is complete, Shenhua Group Corp Vice-President Zhang Yuzhuo said at the ongoing China (Taiyuan) International Coal & Energy New Industry Expo.

The Erdos plant's annual output capacity is 1.08 million tons, and it will consume 3.45 million tons of coal, Zhang said.

Shenhua launched the project in 2004.

Shenhua has joined hands with South Africa-based Sasol, a world leader in coal-to-fuel production, to set up two indirect coal-to-oil plants using Sasol's technology.