Australian exploration company Celsius Coal has signed a non-binding memorandum of understanding (MoU) with two Chinese firms to supply coal from its Uzgen basin coking coal project in the Kyrgyz Republic.

The MoU was signed with Xinjiang Bayi Iron and Steel and China Minmetals.

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Under the MOU, all the three firms will establish a working arrangement to undertake preliminary investigations for the export, testing and supply of coking coal from Celsius’ projects in the Kyrgyz Republic.

"This agreement demonstrates the strong Chinese customer interest in our coking coal."

After signing an agreement, the delivery of the trial shipments will start no earlier than the second quarter of this year and will expire on 31 December.

Celsius said that the primary goal of the MoU is to facilitate the trial shipment of small parcels of coking coal totalling up to 5,000t, for metallurgical testing by the customers, resolution of transport methods and transport routes, and cross-border transfer between the Kyrgyz Republic and China.

The MoU’s scope also includes the potential for long-term supply and purchase arrangements of an estimated 500,000t of coking coal per annum from 2015 to 2019, to be supplied by Celsius Coal.

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The coal supplied from Celsius’ Kyrgyz Republic coal properties will be shared at an allocation yet to-be-agreed between Bayi Steel and China Minmetals.

Celsius Coal executive chairman Alexander Molyneux said that Xinjiang Bayi and China Minmetals are top-tier potential customers for the company’s Uzgen Basin coking coal project.

"The execution of this agreement demonstrates the strong Chinese customer interest in our coking coal," Molyneux said.

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