Australian Treasurer Wayne Swan approved the merger of Gloucester Coal with China’s Yancoal on Thursday.
The merger represents the biggest investment by a Chinese state-owned company into the Australian coal industry.
“The merger will also allow Yancoal’s parent company, Yanzhou Coal Mining Company Limited, to achieve a listing [on the Australian Stock Exchange] of its Australian operations by the end of 2012, which was a condition of its acquisition of Felix Resources Limited in 2009,” said Mr Swan in a statement.
Mr Swan said that an extra 12 months, to the end of 2013, was given to Yanzhou to reduce its economic ownership of Yancoal to less than 70 per cent, which was stipulated as a condition of its acquisition of Felix.
Yanzhou will be required to quarantine the voting rights of any shares that it holds above 70 per cent in the listed Yancoal at the end of 2012.
Other conditions of the merger include that the entity keep its headquarters in Australia, and use a predominantly Australian management and sales team.
The Foreign Investment Review Board will require Yanzhou and Yancoal to report annually on their compliance with these conditions.