Mining giant BHP Billiton announced it has confirmed formation of a joint venture with a subsidiary of PT Adaro Energy TBK for its Indonesian Coal Project (ICP) following the completion of government approvals.

With the deal, Adaro now has 25 per cent interest in the ICP joint venture, with BHP Billiton holding 75 per cent.

BHP Billiton president metallurgical coal, Hubie van Dalsen, said "We are very pleased that the Indonesian Government has approved the formation of the joint venture with Adaro, a strong Indonesian partner who shares our values and our commitment to the protection of the region's outstanding biodiversity."

The ICP is based on a metallurgical coal deposit in central and east Kalimantan which comprises eight companies holding seven Coal Contracts of Works (CCOWs). It was reported that the project hosts 774Mt of undeveloped metallurgical and thermal coal sources.

BHP Billiton said it is progressing study work on the joint venture to identify development options across the seven CCOWs.

The company said the joint venture will be known as the IndoMet Coal Project.

PT Adaro Energy Tbk is Indonesia's biggest coal producer by market value.