As the war in Iran disrupts global oil and chemical supplies, China’s coal-heavy energy sector is seizing an unprecedented opportunity. In the Changji Hui Autonomous Prefecture in Xinjiang – one of the country’s four major bases for large-scale, modern coal-chemical production – a vast industrial ecosystem is rapidly taking shape.
A four-hour drive northeast of Urumqi, the regional capital of Xinjiang, leads to a colossal open-pit mine. There, electric autonomous mining trucks move with silent, clockwork precision, self-navigating the terrain. In China’s far western Gobi desert, futuristic and green technologies are modernizing coal mining and maximizing the resource’s potential through chemical processing. The scale of the infrastructure is immense. The world’s highest-voltage power line already carries electricity from the region to eastern China, while work is under way on the country’s biggest pipeline to transport coal-derived natural gas from northern Xinjiang to developed eastern cities.
The Zhundong National Economic and Technological Development Zone sits upon coal reserves that by weight far surpass the oil riches of the Persian Gulf. A giant national energy and chemical hub is rapidly taking shape. The zone, situated on the southeastern edge of the Junggar Basin, is a gargantuan undertaking. Spanning three counties and covering a planned 15,500 sq km, the zone stretches 220 km from east to west, carving a massive industrial footprint into the arid landscape. Comprising five mining areas, it houses China’s biggest contiguous coalfield. With estimated reserves of 390 billion tons – accounting for 7% of the national total – it is frequently cited as being capable of sustaining China’s immense energy demand for a century. By comparison, data from the Opec Annual Statistical Bulletin for 2025 indicates that the total proven oil reserves of key Persian Gulf nations amount to around 117 billion tons, when calculated using global crude oil conversion standards.
As the conflict in Iran disrupts the global supply of oil, gas and downstream chemicals, the local government of Xinjiang is accelerating the development of a fully integrated, low-carbon coal-to-chemicals production chain using cutting-edge technology in the remote interior of the country. The move is expected to bolster China’s energy self-reliance and security, leveraging its unique natural energy advantages. Large-scale collieries are taking the lead in pushing for advanced electrification and automation to reduce reliance on diesel.
Most of the coal extracted is then transported to a nearby power or chemical plant, where it is either turned into electricity to fuel downstream metallurgy or used directly as feedstock for manufacturing a wide range of basic and high-end chemicals.
While the zone received national approval in 2012, its true metamorphosis has occurred over the past few years, according to Liu Hao, a veteran in local coal logistics. As major heavy industrial plants were built in rapid succession, numerous new job opportunities, shops and residential districts gradually emerged. Dozens of enormous power stations and coal-chemical complexes line the main arteries. “Although Xinjiang possesses abundant coal reserves and its output has risen significantly in recent years, its remote location and limited rail infrastructure have constrained exports,” said Kevin Tu, Managing Director of Agora Energy China, a Beijing-based energy and climate research organization. “As a result, local governments have opted to convert coal on site into power or chemical products.” A vast open-pit mine, which has one of the highest production capacities not only in Xinjiang but in all of China, is surrounded by endless barren salt flats, with virtually no other buildings or supporting facilities nearby. It is also largely shielded from fluctuations in international oil prices, thanks to the electrification of mining operations.
Since August last year, this coalfield has deployed nearly 300 autonomous trucks for haulage. One key supplier, Shanghai-headquartered Boonray Intelligent Technology has a fleet of 120 trucks. Although these autonomous trucks could not yet match the efficiency of traditional manned diesel versions, they need far fewer staff to operate – with just four people in the control center managing the entire fleet. Moreover, these vehicles are powered by electricity generated by the mine’s own power plant, the South China Morning Post reports.
But Xinjiang is not only exploiting its coal reserves. The China Daily adds that inside a 200-square-meter room at the Tianshan Smart Valley Advanced Computing Cluster in Hami, hundreds of servers of China’s telecom companies, cloud computing service providers and tech firms are in operation. Artificial intelligence’s soaring power demand has made Xinjiang and neighboring provinces such as Gansu attractive destinations for AI firms. With abundant solar and wind reserves, Xinjiang offers green power at roughly one-third the price of coastal industrial electricity. Operating costs for a computing company in Hami are more than 40% lower than in the eastern regions of China. The computing centers’ core mission is to convert green power into computing power, resulting in tokens, the smallest unit of information processing in AI models. “Just as oil is the lifeblood of industry, tokens are the most fundamental fuel for AI development,” said Tang Shuheng, Director of the Xinjiang International Integrated Supercomputing Center.
Major AI models based in eastern cities process reasoning requests on servers located in the northwest. Some of these requests serve overseas businesses in North America, Europe and the Asia-Pacific. The clients of these AI model providers pay for token consumption, and the resulting revenue covers electricity, wages and equipment costs. In this way, token flows contribute directly to the local economy. More than China’s energy backyard, the northwest has become an AI hub, with its computing power being exported westward.
