The joint venture will pave the way for JX Nippon to enter the hard coking coal market via Xstrata Coal British Columbia’s handful of coal projects, which include 100,000 hectares of contiguous coal licenses and applications.

XCBC owns the Lossan coal deposit which was purchased in October last year and it has a 100% stake in the Sukunka coal deposit via the recent acquisition of Talisman Energy’s non-core coal assets in British Columbia.

Xstrata Coal currently has a75% stake in XCBC.

Under the JV, Xstrata Coal will develop and operate the coal projects while JX would be the exclusive marketing agent for First Coal and Sukunka coal sold in Japan.

Historical exploration combined with recent studies have identified the deposits within the First Coal tenements as being prospective for metallurgical coal exports.

The First Coal tenements have been identified as having metallurgical export quality.

An exploration program is on track to commence in 2012 following receipt of approvals.

Meanwhile, XCBC’s flagship Sukunka and Suska projects have the potential to produce up to 9.5 million tonnes per annum.

JX Nippon president Yasushi Kimura said the JV was a major turning point for the company.

“This opportunity has great significance for JX as it marks our entry into the hard coking coal market,” he said.

“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 Coal chief executive officer Peter Freyberg said he was looking forward to a long-term partnership with JX which would see the development of a substantial metallurgical coal business in Western Canada.

Xstrata has ramped up its acquisition activity of late in a bid to increase output by 50% through 2014.

Its most recent acquisition was the $500 million purchase of Talisman Energy, which gave the mining giant ownership rights to the Sukunka coal property in the Peace River coalfield.

The licenses encompass 20,000 acres with an underground coal deposit estimated at 236 million metric tons.

Last month, the high profile miner received a takeover offer from 34% stakeholder Glencore International.

At completion, which is set for shareholder vote in May, the merger will create the fourth-largest mining company in the world.