The properties of limonite in Australia and Indonesia were examined by using X-ray diffraction, Mossbauer spectroscopy, Thermal gravimetric analysis (TGA) and TEM-EDX in relation to the catalytic activities in the liquefaction of low-rank coals. The molar ratio of H2O/Fe in limonite was determined from the weight loss resulting from the dehydration reaction of FeOOH to Fe2O3 during heating from 120 to 400degreesC in TGA. The H2O/Fe molar ratio varied from 0.06 for hematite to 0.60 for limonite YY, depending on the hematite content. Results from the pulverization tests showed that the higher value of H2O/Fe molar ratio resulted in lesser abrasion of medium balls. A unique limonite YY in Australia, containing no hematite, was easily pulverized to sub-micron particle size and showed an excellent oil yield in coal liquefaction. It appeared that H2O/Fe molar ratio could be one of the most important factors to select the better limonite catalyst for coal liquefaction. Moreover, it was found that Ni containing limonite SO in Indonesia exhibited a higher liquefaction activity than YY catalyst, because of transformation into a smaller crystallite size of pyrrhotite (Fe1-xS). The agglomeration of pyrrhotites may be suppressed by a strong interaction between FeOOH and Al(OH)(3) Such as Fe-O-Al. TEM-EDX analysis suggests that Ni may be located near the Fe1-xS structure. Oil yield was significantly increased from 43 to 62 wt% daf by CLB addition to the coal slurry in the liquefaction of Banko coal. Finely pulverized limonite catalyst (SO) can be advantageously used in a commercial plant for coal liquefaction in Indonesia due to the low catalyst cost and a high liquefaction activity to obtain a high oil yield. (C) 2002 Elsevier Science Ltd. All rights reserved.