SinoCoking Coal and Coke Chemical Industries, Inc. (SinoCoking), a Florida-headquartered vertically-integrated coal and coke processor with assets in Henan, China, has announced an agreement with Henan, China-based state-owned Zhengzhou Coal Industry Group's sales division Zhengyun Coal Distribution Co., Ltd. (Zhengyun Coal) to purchase up to 3 million metric mt of raw and clean coal annually.
According to a SinoCoking statement, the strategic cooperate agreement with Zhengyun Coal will provide the company with up to 2 million metric tons of raw coal and 1 million metric tons of washed coal each year. Pursuant to this strategic agreement, SinoCoking has signed monthly purchase orders for August and September deliveries for raw coal at $87/mt, and has also orally reached an agreement to set the washed coal price at $141-151/mt, both of which are below current market prices and at levels enjoyed by large state-owned enterprises in China.
Zhengyun Coal has also agreed verbally to give SinoCoking the option to take monthly delivery up to 250,000 metric tons of raw and washed coal, but it is not obligated. Based on the strategic agreement, the company looks to expand its sales and distribution networks in central, southern and eastern China.