Australian regulator approves Yancoal's $2.45-bn acquisition of Rio's thermal coal assets

Australia's foreign investment regulator yesterday approved China's state-controlled Yancoal Australia Ltd's $2.45-billion acquisition of Rio Tinto's Coal and Allied Division.

In January, Anglo-Australian mining giant Rio Tinto agreed to sell its Australian subsidiary Coal & Allied Industries Ltd to Yancoal Australia for up to $2.45 billion in cash. (See: Rio Tinto to sell Coal & Allied to China's Yancoal Australia for up to $2.45 bn)

But the deal had to be approved by Australia's Foreign Investment Review Board (FIRB), which oversees foreign acquisitions of local companies.

Nearly 87 per cent of Yancoal is controlled by Yanzhou Coal Mining Co of China, which in turn is controlled by Shandong Province's State-owned Assets Supervision and Administration Commission, while Hong Kong commodities trader Noble Group holds a 13.3 per cent.

"FIRB approval is a positive step forward for Yancoal, its shareholders and the Hunter Valley, demonstrating the Australian Government's support for continued investment into the local resources sector," said Reinhold Schmidt, CEO of Yancoal said in a statement.

The deal has yet to be approved Rio Tinto and Yanzhou shareholders.

Coal & Allied is Rio Tinto's thermal coal business located in the Hunter Valley region of New South Wales. It owns and operates multiple, multi-seam open cut mines in the Hunter Valley.

It has a 67.6-per cent interest in the Hunter Valley Operations mine, an 80-per cent interest in the Mount Thorley mine, a 55.6-per cent interest in the Warkworth mine, a 36.5-per cent interest in Port Waratah Coal Services (which owns a coal export terminal located at the Port of Newcastle) and other undeveloped coal assets, including various landholdings.

The Hunter Valley operations and Mount Thorley Warkworth mines together produced 25.9 million tonnes of saleable thermal and semi-soft coking coal in 2016 (17.1 million tonnes Rio Tinto share).