(Yicai Global) May 13 -- Shares in Jiayou International Logistics jumped 10 percent today after a unit of the Chinese cross-border logistics provider signed a major supply deal of coking coal, a key element used in the production of steel. The coal is being sourced from Mongolia, which overtook Australia last September to become the biggest exporter of coking coal to China.

Beijing-based Jiayou International Logistics’ share price [SHA:603871] closed up 7.84 percent at CNY25.04 (USD3.88) today. Earlier in the day they hit CNY25.54.

Jiachen International Trade Inner Mongolia has penned an agreement to supply China Energy Investment Coking with at least five million tons of coking coal from the Tavan Tolgoi coal mine in Mongolia over the next five years, the parent firm said yesterday. No details were given about pricing.

Jiachen International Trade already holds a contract to bring in six million tons of coking coal from the Tavan Tolgoi mine over the next four years. This week’s deal means it has already found a customer for five sixths of the commodity it will import.

The Tavan Tolgoi deposits, roughly 190 kilometers from China’s border with Mongolia, are one of the world’s largest untapped coking coal and thermal coal reserves. It has estimated resources of 6.4 billion tons of coal, of which 1.8 billion tons are high-grade coking coal and 4.6 billion tons are thermal coal.

Editor: Kim Taylor