Swiss diversified miner Xstrata Plc, which has agreed to merge with commodities trading giant Glencore, is buying the coking coal assets in Canada's British Columbia from oil explorer Talisman Energy, for $500 million in cash.

The Swiss miner is buying Talisman's Sukunka coal deposit located in the Peace River in northern British Columbia, contiguous to First Coal Corporation and Lossan coal blocks that it acquired in 2011.

Sukunka coal is located near Chetwynd and covers over 20,000 acres and includes an underground mine.

Sukunka, which has estimated reserves of 236 million metric tons, ''has the potential to be a high quality metallurgical coal mine,'' said Peter Freyberg, head of Xstrata's coal division, ''Once developed, Sukunka would meaningfully increase our exposure to hard coking coal.''

Coal from the Peace River region is exported to steel mills in Japan, Korea and China.

Rising steel prices due to continued recovery in demand for steel and rising raw material costs, are expected to continue to cascade through the steel sector as hard coking coal supply shortages become evident.

The huge demand for coking coal from China, Japan and India has made London-listed miner Anglo American and a future takeover target for Xstrata, scrap its plans last year of selling its own Peace River Coal asset.

Xstrata, one of the world's largest exporters of thermal coal, and the fifth-largest producer of hard coking coal, has increased its tenements in the Peace River Coalfield to more than 120,000 hectares with the acquisition of Sukunka coal deposit.

Other Xstrata coal assets in Canada are its 75-per cent stake in the metallurgical Donkin Coal Project Cape Breton, Nova Scotia, and a 33.3-per cent stake in the Cerrejón joint venture project located in North-East Colombia.

Xstrata has interests in over 30 operating coal mines in Australia, South Africa and Colombia, and exploration projects in Canada.

Talisman, a Calgary, Alberta-based oil and gas producer, is selling non-producing, non-core assets as part of a strategy to focus on its core business.