Financial terms of the deal were undisclosed.
Under the terms of the deal, BHP Billiton agreed to sell 75% stake in IndoMet Coal, which comprises seven coal contracts of work located in Central and Eastern Kalimantan, Indonesia.
IndoMet Coal Asset president James Palmer said: "After a detailed review of IndoMet Coal, we concluded that although the Project could support a larger scale development, BHP Billiton has a range of other growth options in the portfolio that are more attractive for future investment."
The coal contracts of work in Central and Eastern Kalimantan include the Haju mine.
Commissioned in 2015, the Haju mine has capacity to produce one million tons of coal a year.
The deal, however, is subject to customary regulatory approvals.
Separately, BHP Billiton has signed $7.37m deal with Peking University to identify the key policy, technical and economic barriers to carbon capture, use and storage (CCUS) deployment in the iron and steel industries.
BHP Billiton CEO Andrew Mackenzie said: "The application of carbon capture, use and storage may prove to be important to reducing the volume of greenhouse gas emitted by the steel sector in China and elsewhere.
"The work to be undertaken through this agreement is a necessary first step to get the fundamentals right and accelerate CCUS development and deployment."
