The master coal purchase and sale agreement is based on predetermined contract pricing and is valued between $47 and $51 million per year for four years.

The Chinese customer will receive compliant thermal coal from America West’s Horizon operation in Carbon County, Utah.

The deal will be much easier to fulfill after the producer’s announcement this week that it has leased a coal storage and export terminal at a northwestern US seaport. America West anticipates using the facility to supply coal to China-based power companies and other industrial thermal coal users in the Asian market.

Under the deal, rail shipments of coal from Horizon to the terminal will begin immediately. Subsequent shipments to China will begin in June.

"We are very pleased that global demand for our compliant coal has been increasingly robust,” America West chief executive officer Dan Baker said.

“In view of the number of new coal supply contracts we have signed or are currently negotiating, America West is working diligently towards re-establishing mining operations in two pillar sections at Horizon, with a goal of expanding to three sections by the end of this year and significantly increasing production."

Last December, America West signed a letter of intent with Chinese company Shanxi Jiexiu to acquire a majority interest in its Luxin coking coal operations.

The $40 million stock and cash deal with Shanxi Jiexiu, which also operates coal mines and a coal-trading operation, was structured as a 30-year contractual joint venture. America West will acquire a 70% equity interest while the Chinese company will retain 30%.

In addition to the issued stock, America West will contribute $30 million to the joint venture when the deal closes, and Shanxi Jiexiu will contribute the coking assets.

The venture will also have rights to metallurgical coal production from Shanxi Jiexiu's coal mines, ensuring a steady and low-cost materials supply. The company’s deposits in the Shanxi province total more than 100 million tons.