Australia flip-flops on Chinese investments, approves Yanzhou's $3.5-billion bid for Felix
24 Oct 2009
After issuing guidelines that cap foreign investments at 15 per cent on developed mining projects, it did a flip-flop yesterday, approving Yanzhou Coal's $3.5-billion acquisition of Felix Resources, albeit with stringent conditions.
Yesterday's approval of Shandong-based Yanzhou Coal's takeover of coal-miner Felix Resources for $3.5 billion, makes it China's biggest investment in Australia's resources sector to date by a state-owned enterprise. Yanzhou Coal is majority owned by the Yankuang Group.
In approving the acquisition, the Australian government has laid down the most stringent conditions that require Yanzhou to operate its Australian mines through an Australian company Yancoal Australia Pty. Ltd., and list it on the Australian Securities Exchange by the end of 2012.
During this period, China's fourth-biggest coal miner, Yanzhou will have to reduce its ownership in Yancoal Australia Pty to less than 70 per cent. The management and sales team of Yancoal hav to be mainly Australian and the company must have at least two directors living in Australia, of whom one should be independent.
After Yancoal is listed, Yanzhou's equivalent ownership must be no more than 50 per cent of any mines. The Australian regulator has said that coal produced at all its Australian mines would be sold with reference to international benchmark prices.
Assistant Treasurer Nick Sherry said in a statement that Yanzhou had already accepted these tough terms and will also base the local Yancoal Australia's chief executive and chief financial officer in Australia.
