Xstrata PLC, the Swiss mining giant, is buying rights to a coal deposit in the Peace River region of B.C. from Talisman Energy Inc.
Xstrata Coal, an Australian subsidiary of Xstrata, which is merging with Glencore International PLC, will pay Talisman $500 million cash for the Sukunka coal deposit. Xstrata has other coal properties in the province as well.
The type of coal found in the Sukunka deposit is used in the hard coking steel-making process, the biggest demand for which is in China. China’s economic growth is driving all minerals related to steel-making sky high, including metallurgical coal.
The Sukunka has 236 million tonnes of measured and indicated coal reserves.
“Based on our due diligence and technical analysis, Sukunka has the potential to be a high-quality metallurgical coal mine,” said Xstrata Coal chief executive Peter Freyberg.
“Once developed, Sukunka would meaningfully increase our exposure to hard coking coal, while unlocking synergies with our neighbouring assets in the Peace River coal field and providing additional regional scale.”
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