Molecular models of low-rank coal containing water, aqua-ionic species, and transition metal aqua-complexes, were optimised using semi-empirical (SE) quantum mechanics; the model was constructed with properties similar to brown coal; 10-20 wt% water was hydrogen bonded to coal oxygen groups, and the remainder was bulk water. Single point self-consistent field (1scf) computations of coal models provided octahedral mono-, and di-nuclear complexes of Cr, Fe, Co, and Ni, but SE computations often provided distorted structures. Models of char were developed by transforming the coal model containing multi-nuclear metal species into char according to pyrolysis chemistry; the composition of char models containing iron oxides was similar to char samples obtained over 250-800 degrees C. Density functional theory (DFT) optimisation of char models with metal clusters provided low energy configurations of disordered structures with a shallow energy minimum. SE and DFT calculations of char models containing metal clusters were conducted for mechanisms for H2 and CO formation from pyrolysis and iron-catalysed steam gasification; the active site for gasification was [Fe-C] and its accessibility to H2O was related to the configuration of the char model. The major steps in iron-catalysed steam gasification were chemi-adsorption of water on [Fe-C], hydrogen abstraction, and oxygen transfer.