Under the JV, BHP will hold 75% of the metallurgical and thermal coal project in the Indonesian territory of Kalimantan, also known as the island of Borneo.

Major Indonesia thermal coal producer Adaro will hold the remaining 25%, with the agreement covering seven coal contracts of work in east and central Kalimantan.

“These agreements with Adaro provide a strong local partner to ensure the successful development of our world-class metallurgical coal interests in Indonesia,” BHP president of metallurgical coal Hubie van Dalsen said.

Completion of the deal remains subject to Indonesian government approval.

The Maruwai project contains 63 million tonnes of measured, 33Mt indicated and 658Mt of inferred resources.

In late 2008 the Indonesian government passed mining laws which imposed new requirements for international companies operating in the country.

When shelving the $100 million Haju trial mine in June 2009, BHP said it was not a sufficient fit with its long-term strategy but that it would further evaluate the project.

The Maruwai coal deposit was discovered by BHP Billiton Minerals Exploration in the late 1990s.

BHP shares closed up 36c to $43.95 today.