Yanzhou Coal Gets Government Approval To Acquire Felix Resources

Published: 26-Oct-2009

The assistant treasurer of the Government of Australia has approved the application by a Chinese Mining company Yanzhou Coal Mining to acquire full ownership of Felix Resources, conditional upon it complying with legally enforceable undertakings.

The undertakings apply to all of Yanzhou's operations, including the Austar mine near Newcastle which Yanzhou already owns.

Yanzhou has undertaken to operate its Australian mines through a company, Yancoal Australia Proprietary, that is incorporated and headquartered in Australia and is managed in Australia using a predominately Australian management and sales team.

The company has undertaken to ensure Yancoal Australia, and any of its operating subsidiaries, have at least two directors whose principal place of residence is in Australia, one of whom will be independent of Yanzhou and its related entities. It has also undertaken to ensure that the CEO and CFO of Yancoal Australia have their principal place of residence in Australia.

Yanzhou has undertaken to list Yancoal Australia on the Australian Securities Exchange by the end of 2012 and, by that time, reduce Yanzhou's ownership of Yancoal Australia to less than a 70% holding, and to market coal produced at all of its Australian mines on arms-length terms with reference to international benchmarks and in line with market practices.

Senator Nick Sherry, assistant treasurer, the Government of Australia, said: "With these undertakings provided by Yanzhou, I consider that this acquisition is consistent with Australia's national interest.

"As such, compliance with these undertakings is a condition of my approval of the acquisition under section 25 (1A) of the Foreign Acquisitions and Takeovers Act 1975.'

As reported, the Chinese coal miner will pay $3.28 billion for the acquisition and the majority of both Yanzhou Coal and Felix shareholders now have to approve the proposal to proceed.