(EnergyAsia, November 12 2012, Monday) — Australia-listed Modun Resources said it has signed an agreement for trader Tennant Metals to market the thermal coal produced at its wholly owned Nuurst project in central Mongolia.

According to Modun, Tennant will have exclusive rights to purchase all of Nuurst’s thermal coal available for export and at least half of the allocation for the domestic market for 15 years. The sales will be set at market prices.

Located six km from rail infrastructure connected directly to the Chinese border, Nuurst holds an estimated reserve of 489 million tonnes on a 34.5 sq km licence area. Nuurst Coal Project is located 120 km south of the Mongolian capital of Ulaanbaatar and 600 km north of the Chinese border.

Tennant is expected to begin marketing Nuurst coal this month following an updated assessment of the reserve size and quality. According to Modun, Nuurst coal is primarily suitable for power production and is likely to be analogous in quality parameters to Indonesian sub-bituminous thermal coal that is highly demanded in China.

Rick Dalton, Modun’s managing director, said:

“The signing of a heads of agreement with Tennant is a substantial achievement in terms of progressing the Nuurst project through to production. We are excited to develop this partnership with Tennant who have significant experience in the key Chinese coal market, especially from their Beijing and Sydney offices. We believe that the agreement demonstrates the clear demand for Nuurst quality coal in China.”

Dennis Karp, Tennant’s managing director, said:

“Tennant is pleased to be working with Modun and sees significant potential for its thermal coal sales into China and in the domestic Mongolian market. This agreement provides Tennant with the opportunity to essentially partner with an emerging producer in an exciting coal producing region, and facilitate access to a multi-dimensional customer base which should deliver long term customer and price benefits for Modun. At the same time this opportunity provides our Chinese customers with access to new and as yet un-tapped supply.”

Among Australia’s oldest trading companies, Tennant Metals was originally part of the Renison Goldfields Group before it was spun off in the early 1990’s. The company has long had a strong Asian focus with offices in Taiwan, China and Vietnam.