Rye straw was completely liquefied using red mud or CoO-MoO3 catalysts with and without S with tetralin as solvent under various process conditions, for liq. fuel manuf. The red mud catalyst had satisfactory activity only in the presence of S at .apprx.673 K; in this conditions red mud is a suitable and economic catalyst for biomass hydroliquefaction. The product distribution varied with reaction conditions and was comparable to that obtained in hydroliquefaction of cellulose and lignin. A model of the reaction is given which assumes that pyrolysis precedes hydrogenation of products, CO and CO2 are products of the pyrolysis reaction, and H is consumed mainly in hydrogenation reactions.