The coal-to-oil project of Shenhua Group, the country's largest coal producer, is expected to start trial operation in July, a company executive said Thursday.

The project's first production line will convert 3.5 million tons of coal to 1.08 million tons of diesel and naphtha annually, said Zhang Diankui, vice president (Project Planning) of Shenhua Coal Liquefaction Corp (Beijing).

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The project has a designed annual production capacity of 5 million tons, Zhang told a coal chemical forum. But the first three production lines in the first phase would produce 3.2 million tons of coal chemical products annually.

The project is in Ejin Horo Banner in north China's Inner Mongolia autonomous region.

Shenhua Group would expand its oil and chemicals production capacity to 30 million tonnes in 2020, Zhang said.

The group planned to invest 400 billion yuan to build seven coal chemical production bases in regions, including Inner Mongolia, Ningxia, Xinjiang, Shaanxi and Shanxi, he added.