Mechel has not yet specified the financial outline of the deal which is initially proposed to span a 15-year period.

Coal will be supplied from the miner’s Elga complex in remote Siberia and will gradually ramp up deliveries if test burns at RAO facilities yield positive results.

Mechel chief executive Igo Zyuzin said his company had longstanding ties with RAO and its subsidiaries, having already supplied steam coal to the utility from its Neryungri open pit.

“Signing the cooperation agreement for supplies of Elga’s coal with RAO Energy Systems of Eastis a new stage in the business ties between our companies,” he said.

“What is particularly important, this agreement will ensure guaranteed sales of products from Elga coal complex, which is a priority development project for our company, on the Russian coal market.”

One of the largest coking coal fields in the world, Elga deposits lie in flat seams up to 15m thick with low-thickness capping.

Mechel says development and construction of a 321km railroad connecting the proposed Elga open pit to the Baikal-Amur mainline will increase exports to the rapidly expanding economies of the Asia-Pacific region.