Wayne Swan has approved the merger of Gloucester Coal and Chinese miner Yancoal.
The agreement between the two miners will now allow Yancoal’s parent company, Yanzhou Coal Mining, to achieve an Australian listing of its operations by the end of the year.
It is the largest investment by a Chinese state owned operation into the country’s coal industry, as the focus had previously been on Australia’s iron ore resources.
"Yanzhou’s investment in the Australian coal industry will allow for the further development of Australia’s coal deposits, which will have a positive impact on employment and growth in the sector," Swan stated.
According to a statement by Swan, a condition of the merger is that Yanzhou reduce its ownership in Yancoal to less than 70%.
It will also be required to reduce its ownership in Syntech Resources and Premier Coal by the end of 2014.
A major part of the decision is that it will have to operate Yancoal as an Australian business "using a predominately Australian management and sales team", and that the company has at least two directors who principal place of residence is in Australia.
Despite receiving Swan’s approval, both Yancoal and Yanzhou have to report to the FIRB regarding compliance annually.
The announcement of Swan’s approval was welcomed by Gloucester.
The merger is the latest massive deal in the coal industry, following Peabody Energy’s acquisition of Macarthur Coal last year.