VANCOUVER – A subsidiary of Swiss global mining giant Xstrata PLC that operates in B.C.’s coal industry says JX Nippon Oil & Energy Corp. will pay US$ 435 million for a 25 per cent stake in the operation.
Xstrata Coal British Columbia said Wednesday it will retain a 75 stake in the joint venture, that will own coking coal assets in B.C.’s Peace River Coalfields.
Coking coal, or metallurgical coal, is used to make steel.
Xstrata has been rapidly expanding its assets in the coalfield that extends 400 kilometres across northeastern British Columbia, most recently with the US$ 500-million purchase of the Sukunka coal property from Talisman Energy Inc. (TSX:TLM), set to close later this month.
In October 2011, Australia-based Xstrata Coal agreed to pay $ 40 million to Cline Mining Corp. to acquire a coal deposit within the Lossan property in northeastern British Columbia.
Its first purchase was the First Coal Corp. tenements, acquired in August 2011.
Xstrata Coal will develop, operate and manage the assets of the joint venture, while JX will be the exclusive marketing agent for First Coal and Sukunka coal sold into Japan.
Japan has been looking to diversify its coal supply away from Australia, where both Xstrata and JX Nippon Oil & Energy Corp. are based, after devastating floods in the country’s major coal producing region last year.
The two companies have already partnered up on the Oakbridge joint venture in Australia.
“We are pleased to work with JX again as our long term partner in building a substantial metallurgical coal business in Western Canada,” said Peter Freyberg, Xstrata Coal’s chief executive.
The deal represents JX’s entry into the hard coking coal market, said Yasushi Kimura, president of JX Nippon Oil & Energy.
“Our existing coal business focuses on the supply of thermal coal to utility companies, and this joint venture enables a full-scale expansion of our business into hard coking coal, which is essential for steel manufacturing.”
Xstrata is one of the world’s largest producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and also produces silver, lead, platinum, gold, cobalt and vanadium. It has operations in more than 20 countries and employs more than 70,000 people.
JX Nippon Oil & Energy is an energy company is a core operating company of the JX Group. Its main business activities include refining and marketing products, and importing and selling gas and coal.
Local news from metronews.ca/vancouver
About The Reporter
