Foreign ownership restrictions are being lifted to allow Chinese owned Yanzhou Coal to increase its share in Queensland-based miner Yancoal Australia from 70 to 100 per cent.
Federal Treasurer Joe Hockey announced the foreign investment decision on Wednesday, clearing the way for Yanzhou to alter its investment stake.
Hockey said the conditions that were imposed in 2009 on the company gave it the ability to seek Treasurer’s approval to vary the terms if it was being 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 in a statement.
Previously Yanzhou was required to reduce it ownership to less than 70 per cent and keep its economic interest in Yancoal’s former Felix Resources coal mining assets to less than 50 per cent by the end of December 2013.
The conditions also stipulated the Chinese company reduce its economic interest in the Syntech Resources and Premier Coal mines to less than 70 per cent by the end of 2014.
“To date, Yanzhou has made progress in meeting those conditions by reducing its stake in Yancoal to 78 per cent,” Hockey said.
“It has sought my approval to have the conditions removed so it can maintain its existing stake.”
Hockey said Yanzhou has vowed to continue supporting Yancoal’s ongoing Australian operations.
“So long as Yanzhou continues to own at least 51 per cent of the shares of Yancoal, Yanzhou will ensure Yancoal continues to operate so that it remains solvent,” he said.
“In addition, Yanzhou will extend its existing loans to Yancoal if required, and will support Yancoal’s plans to expand the Moolarben open cut mine.”
Yanzhou has previously considered options to seek 100 per cent ownership of Yancoal.
Hockey said such decisions are made on a case-by-case basis and the government doesn’t object to 100 per cent foreign ownership of Australian companies so long as it is in the national interest.
“The Government has no in-principle objection to 100 per cent foreign ownership of Australian companies where it is not contrary to the national interest and is open to any such proposals from Yanzhou in the future,” he said.