South Korea’s leading steelmaker POSCO said Sunday it is moving to develop a new type of clean energy in resource-rich Mongolia together with a local company there.

POSCO said it has joined hands with MCS Group, one of the largest private companies in Mongolia, to start a coal-to-liquid business in the country and is in the process of obtaining approval from Ulan Bator.

To that end, the steel giant set up a joint venture with MCS, named Baganuur Energy Corp.

CTL refers to converting coal to liquids by a hydrogenation process and then extracting dimethyl ether, which is cheaper than liquefied petroleum gas and produces less carbon dioxide. It has emerged as a new alternative to oil and other fossil fuels.

POSCO said the joint venture plans to turn out 100,000 tons of DME and 450,000 tons of diesel oil per year.

Through the joint venture, POSCO has secured a foothold in developing resources in Mongolia, which has the 10th-largest coal reserves in the world, the South Korean company said. (Yonhap News)