The world’s biggest mining group BHP Billiton and partner Mitsubishi Corp agreed to pay $2.4 billion (1.2 billion pounds) in cash for a coal project next to their existing mine in Australia, BHP said on Thursday.

The BHP Billiton Mitsubishi Alliance (BMA), the world’s biggest producer of coal used in steelmaking, will buy the New Saraji project from Australian coal producer New Hope Corp, a statement said.

“New Saraji has the potential to be developed into a large-scale, high-quality metallurgical coal operation. New Saraji could also potentially deliver significant synergies due to its proximity to BMA’s existing Saraji mine,” BHP Billiton Coal President Dave Murray said.

The project, located near Bysart in Queensland, has estimated total resources of 690 million tonnes.

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