A simple mechanistic model for brown coal liquefaction has been developed and used in conjunction with data from PDU operation to examine the factors which contribute to hydrogen consumption. It is found that after allowing for hydrogen generation requirements, the maximum achievable refined product yield from Morwell brown coal ((ssuming a naphtha/middle distillate ratio of 5:6 together with refined product H/C ratios of 1.8 for naphtha and 1.5 for middle distillate) is 46 - 48%, corresponding to a hydrogen consumption of 6.6 - 7.6%. Alternatively, if consideration of hydrogen generation is excluded (as in pilot plant operation), the maximum yield would be around 54%, corresponding to 6.6% net hydrogen consumption. These results suggest that an aim of maximizing product yield by decreasing Cl-C4 gas formation may not be as desirable as at first thought.