UPDATE: BHP Billiton, Adaro In Indonesian Coal Joint Venture

BHP Billiton Ltd. (BHP.AU) said Wednesday it has entered into a joint venture with a subsidiary of PT Adaro Energy (ADRO.JK) for a coal project in Indonesia.

Adaro will take a 25% stake in the project, which covers seven contract areas in East and Central Kalimantan provinces, where undeveloped metallurgical and thermal coal resources are estimated at 774 million metric tons. BHP will hold the rest, it said.

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

The agreement still needs to be approved by the Indonesian government.

Adaro Energy's Director of Corporate Affairs and Corporate Secretary Andre Mamuaya said the coal project in Maruwai was still in the exploratory phase.

"We are also doing a feasibility study to determine when we can start production," Mamuaya said.

Mamuaya didn't mention the value of investment of Adaro's unit in the project.

In December, Macquarie Securities said Adaro's $1.3 billion fundraising in late 2009, consisting of a global bond and standby loan, would allow "significant" acquisitions such as BHP's Maruwai project.

Adaro, the country's second-ranked thermal coal miner by output, plans to mine around 45 million tons of low-sulfur thermal coal in 2010 versus 41 million tons forecast this year, and to export 70%-75% of it in 2009 and 2010, the company's chief executive said in December.

Earlier Wednesday, Adaro Energy posted a near five-fold jump in 2009 net profit mostly due to a sharp increase in revenue.

Net profit for the January-December period rose to IDR4.37 trillion from IDR887.20 billion in the previous year.

-By Cynthia Koons; Dow Jones Newswires; 61-2-8272-4691; [e-mail]

-Edhi Pranasidhi in Jakarta contributed to this article.