BHP Billiton Sheds Indonesian Coal Assets

BHP Billiton said on Tuesday it has agreed to sell its coal assets in Indonesia to its partner, Adaro Energy, following a slump in prices for metallurgical coal.

BHP did not disclose the price for its 75 percent stake in IndoMet Coal, which it first flagged was up for sale in April.

Adaro, however, Indonesia's second largest thermal coal producer, said in a statement the deal was worth $120 million and would "become effective upon the fulfilment of requirements in the share sale agreement, including necessary approvals from the Government of the Republic of Indonesia."

The amount is well below the $335 million Adaro paid for a 25 percent stake in IndoMet in 2010. Analyst had said in April that BHP would be lucky to get $200 million for its stake due to regulatory uncertainty in Indonesia and the sharp slump in coal prices.

"After a detailed review of IndoMet Coal, we concluded that although the project could support a larger scale development, BHP Billiton (BHPLF) has a range of other growth options in the portfolio that are more attractive for future investment," IndoMet Coal asset president James Palmer had said in a statement earlier in the day.

IndoMet holds seven coal contracts of work in Central and Eastern Kalimantan, including the 1 million tonnes a year Haju mine, which started producing last year.

Haju made up less than 2 percent of BHP's metallurgical coal output in the first nine months of its current fiscal year.

Reporting by Sonali Paul