The deal will see Datong transport the coal by sea from either Qinghuangdao or Jingtang ports in Hebei Province through the end of September.

SinoCoking chairman and chief executive Jianhua Ly said he intended the arrangement to establish a long-term relationship with Datong as the miner was an ideal candidate for steady coal supply.

“Datong Group is one of China’s largest coal producers and is well-known domestically and internationally for its low-ash, low-sulphur and high-energy content coal,” he said.

“Our business plan is to continue to diversify our product portfolio to take advantage of market conditions for coal and coke products.”

Ly said SinoCoking planned to use the purchased coal by reselling it to power plants, processing it and selling it as a washed coal product when market conditions were favourable or manufacturing metallurgical coke for a market he expected to recover in 2013.

“We will continue to explore additional opportunities by signing new agreements with coal producers in other provinces and we look forward to report our progress in the upcoming months,” he said.

A key thermal and coking coal supplier in central China, SinoCoking and Coke Chemical Industries uses coal from both its own mines and that of third-party mines to produce products for steel manufacturers, power generators and various industrial users.