South32 has agreed to buy a 50 percent stake in the Eagle Downs metallurgical coal project in Queensland from state-owned China BaoWu Steel Group for an upfront payment of $US106 million ($140 million).
The acquisition, through which the miner will become the project operator, includes a deferred payment of $US27 million ($35.8 million) and a coal price linked production royalty of up to $US80 million ($106.2 million), South32 said in a statement.
BaoWu subsidiary Aquila Resources will continue to hold the remaining 50 percent stake in Eagle Downs.
The acquisition will deepen the company's longstanding relationship with BaoWu, South32 chief executive Graham Kerr said.
South32, the world's biggest manganese producer, plans to fund the deal through its cash reserves and on completion proposes to conduct a final feasibility study tht will seek to optimise the mine's design and development.
Shares of the Perth-based company edged up in a flat overall market.