ASF said Fujian aimed to initially import 2 million tonnes per annum from Australia and to steadily increase this level to 10Mtpa.

Fujian has agreed to purchase this coal exclusively from ASF.

ASF is not yet a coal producer and said the product would initially be sourced from coal fine deposits at coalfields on the south coast of New South Wales.

The Australia-listed company is also seeking supply sources of Australian east coast coal which could either be contracted for or acquired.

ASF said Fujian had already raised a letter of credit to cover the first shipment of about 45,000t expected to depart Port Kembla by February.

“The company is encouraged by the exclusive working relationship with Fujian Materials that this sale transaction represents and looks forward to developing a profitable business in the export of coal from Australia to China,” ASF chairwoman Min Yang said.

ASF’s South Ellendale project consists of six exploration licences and four exploration licence applications and covers a 2000-square-kilometre area of the Canning Basin in Western Australia deemed to be prospective for diamonds as well as thermal coal.

ASF also has base metals and gold projects in Tasmania.

Shares in ASF are up 1c to 18c this morning.