Two low-rank coals with high sulfur contents (Gediz subbituminous coal: 7.6 wt % S:dry basis. Cayirhan lignite: 5.7 wt%, S:dry basis.) were subjected to hydroliquefaction. Liquefaction conditions included dry or solvent mediated runs under pressurized hydrogen without added catalyst or with the impregnated catalyst precursor ammonium heptamolybdate AHM). Gediz coal having higher sulfur content gave 90% conversion in the absence of catalyst and solvent. Maximum conversion (98%) and maximum oil + gas yield (70%) from this coal were obtained by impregnating AHM onto coal and carrying out liquefaction in H-2/tetralin system at 450 degreesC for 30 min. Under the same conditions, Cayirhan lignite gave 85% conversion and 70.5% oil + gas yield. The superior hydrodesulfurization effect of impregnated AHM on the oil fraction when used in the absence of solvent (less than 0.1% S in lignite's oil and less than 1% S in subbituminous coal's oil following one-stage hydrogenation) is a promising finding of this work. AHM was found to be much more effective in liquefaction of Cayirhan lignite and this has been ascribed to the well-dispersion of AHM throughout this lignite's structure via a cation-exchange mechanism through oxygen functionalities. Strong evidence for the catalytic effect of clay minerals in coal structure on char-forming reactions during liquefaction was observed by making use of liquefaction reactions of demineralized coal samples. It was also observed that tetralin had a retarding effect on the condensation and subsequent cross-linking reactions.