Today I announce my decision to remove certain foreign investment conditions placed on Yanzhou Coal Mining Company, a Chinese state owned enterprise, restricting its ownership of Yancoal Australia Limited.
These conditions required Yanzhou to reduce its ownership in Yancoal from 100 per cent to less than 70 per cent and its economic interest in Yancoal’s former Felix Resources coal mining assets to less than 50 per cent by the end of December 2013; and to reduce its economic interest in the Syntech Resources and Premier Coal mines to less than 70 per cent by 31 December 2014.
The conditions imposed in 2009 also provided Yanzhou with the ability to seek the Treasurer’s approval 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.
To date, Yanzhou has made progress in meeting those conditions by reducing its stake in Yancoal to 78 per cent. It has sought my approval to have the conditions removed so it can maintain its existing stake.
In commitments provided to me, Yanzhou has undertaken to continue to support Yancoal’s ongoing operations in Australia, thereby maintaining its position as a major regional employer.
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. 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. While foreign investment proposals are considered on a case-by-case basis, 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.