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The government will not oppose Yanzhou Coal having full ownership of Yancoal, Australian treasurer Joe Hockey announced on Wednesday December 11.
Originally, Yanzhou Coal was required to reduce its ownership of Yancoal from 78% to below 70% by the end of 2013, as well as to shrink its interest in Yancoal’s former Felix Resources coal mining asset to less than 50% by the end of 2013. The Chinese coal miner also had to cut its stakes in Syntech Resources and Premier Coal mines that it owned through Yancoal to less than 70% by the end of 2014.
The conditions imposed on Yanzhou Coal allowed it to seek the Australian treasurer’s approval to “to vary these conditions if they were impacted by changes in economic conditions or other factors”.
“Since those conditions were imposed, significant challenges have emerged for the Australian coal industry, including slowing demand, declining coal prices and a number of mine closures,” Hockey said.
Yanzhou Coal sought approval to have the conditions removed so it could maintain its existing 78% stake, he said.
The Chinese company undertakes to continue supporting Yancoal’s operation, and will extend its existing loans to the Australian company if required, and will support its plans to expand the Moolarben open cut mine, he elaborated.
Yanzhou Coal had proposed to take over Yancoal in July 2013.
Yancoal, a coal mining company based in Queensland, reported a net loss of A$749.4 million ($682.8 million) for the first half of 2013, due to “challenging” coal markets.
Australia is removing foreign investment restrictions that had kept China’s Yanzhou Coal Mining from taking full ownership of Yancoal Australia.