Xstrata Coal and JX Nippon Oil & Energy Corporation (JX) have announced the creation of a joint venture comprising contiguous metallurgical coal assets in the Peace River Coalfields in Western Canada. JX Nippon Oil & Energy(Australia)Pty Ltd (JX Australia), a subsidiary of JX, has paid US$ 435 million in cash to acquire a 25% stake in Xstrata Coal British Columbia (XCBC). XCBC comprises a 100% interest in the following metallurgical coal assets:
- First Coal Corporation (First Coal) tenements, acquired by Xstrata Coal in August 2011, representing over 100,000 hectares of contiguous coal licenses and applications.
- The Lossan coal deposit acquired by Xstrata Coal in October 2011.
- The Sukunka coal deposit, the acquisition of which was announced on 8 March 2012.
Xstrata Coal has retained a 75% stake in XCBC and will develop, operate and manage the assets on behalf of the joint venture. Together with its 25% stake in XCBC through JX Australia, JX will be the exclusive marketing agent for First Coal and Sukunka coal sold into Japan.
Technical studies have indicated that the two most advanced XCBC projects, Sukunka and Suska, have the potential to produce up to approximately 9.5 million tpy. The majority of this production is expected to comprise hard coking coal with the balance expected to be PCI coal.
JX’s President, Yasushi Kimura said, “JX and Xstrata Coal have built a strong relationship over the years via our Oakbridge joint venture. This opportunity has great significance for JX as it marks our entry into the hard coking coal market.”
The parties have entered into a joint venture relationship agreement for the XCBC assets. J.P.Morgan acted as financial adviser to JX, while JT Boyd acted as technical adviser and Norton Rose acted as legal adviser. Bennett Jones and King & Wood Mallesons acted as legal advisers to Xstrata Coal.
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