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Xstrata Plc (XTA), the biggest exporter of coal for power stations, and JX Nippon Oil & Energy Corp. agreed to form a joint venture to develop metallurgical-coal deposits in northeastern British Columbia.
JX Nippon, Japan’s biggest oil refiner, paid $435 million in cash to acquire a 25 percent stake in the western Canadian venture and will market coal used to make steel to customers in Japan, the companies said today in a statement. Xstrata, which retained ownership of the rest of the venture, will manage and operate the project.
The companies are already partners in the Oakbridge thermal-coal venture in Australia. The Canadian mines will produce metallurgical coal and pulverized coal injection, two varieties of the fuel used in steelmaking. Thermal coal is burned by power utilities to produce electricity.
JPMorgan Chase & Co. acted as financial adviser to Tokyo- based JX Nippon, and Norton Rose LLP was its legal adviser. Bennett Jones LLP and King & Wood Mallesons acted as legal advisers to Xstrata Coal, a unit of Zug, Switzerland-based Xstrata.
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