Highly dispersed solid catalysts are very active in the conversion of coal to liquids. Catalysts are widely used to carry out several chemical reactions effectively, and are responsible for reduced production cost of many industrial products. More over the technology of catalysis is the heart of chemical and petroleum industries. Most of the coal liquefaction catalysts invariably contain ferromagnetic metals Fe/Co/Ni along with other transition elements, supports and promoters. Particle size, morphology, state of the unfilled d-shells and unpaired electrons and nature of the metallic charge distribution in the catalyst composite govern both the catalytic and magnetic behavior of the catalyst. Though much experimental data on catalytic yields are available, little effort has been devoted to correlating the physical and chemical characteristics of these inter-metallic clusters. Very little is understood about the specific roles of different elements in a catalyst. Many of the published results appear less selective and not easily reproducible. Though much has been accomplished, considerable research is still needed to develop a firm scientific basis. The specific roles and functions of different elements in a catalyst composite, or how and why they influence the nature of the products are unclear. To gain a better understanding of the mechanisms involved, we have undertaken a detailed study of the physico-chemical characteristics of both the chemisorbed molecules and the nano size catalyst particles.