Under the three-year agreement, MC will supply Huadong with at least 400,000 tonnes per annum, which amounts to half of Makhado's HCC output, on a free-on-board basis at Mozambique's Matola terminal in Maputo.

The price will be linked to a published index price, which MC Mining said confirmed "the marketability of Makhado's coal".

"International prices of HCC have been positive over the last 18 months and the company is confident that long-term prices will remain favourable," it said.

The first supply is due 18 months after construction of Makhado begins, with site works expected to start by June 30, 2020.

The agreement is subject to MC Mining confirming secured funding for Makhado by April 1, 2019, as well as the procurement of other internal and regulatory approvals by the same date.

MC Mining CEO David Brown said the agreement reaffirmed international appetite for HCC.

"South Africa is a traditional producer of thermal coal with currently no significant HCC being produced, which results in producers having to import the commodity," he said.

"Makhado's coking coal has the necessary attributes to replace some of these imports whilst the development of the project will generate employment opportunities in the Limpopo province and make a positive contribution to the national balance of payments."

In Johannesburg, MC Mining's shares were down 3.81% Monday to R3.79 (US26c) per share.