JOHANNESBURG (miningweekly.com) – Federal Treasurer Joe Hockey on Wednesday removed certain foreign investment sell-down conditions imposed on Yanzhou Coal Mining Company, which restricted its ownership in local unit Yancoal Australia, and said that he would be open to the Chinese group potentially taking full ownership.

The conditions, which were imposed in 2009, required Yanzhou to reduce its ownership in Yancoal to less than 70%, and its economic interest in certain underlying assets acquired when Yancoal acquired Felix Resources in 2009, to no more than 50%. Both of these conditions had to be met by December 2013.

Furthermore, Yanzhou had been asked to reduce its ownership of Premier Coal, Syntech Holdings and Syntech Holdings II or their assets also to below 70%, by December 2014.

Hockey said on Wednesday that the imposed conditions 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,” Hockey said.

He pointed out that Yanzhou had made progress in meeting those conditions by reducing its stake in Yancoal to 78%, and had now sought approval to have the conditions removed so it could 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,” the Treasurer said.

“So long as Yanzhou continues to own at least 51% 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 opencut mine.”

Earlier this year, Yanzhou announced that it was considering the privatisation of Yancoal Australia, which owns mines in New South Wales and Queensland, by buying out minorities.

“While foreign investment proposals are considered on a case-by-case basis, the government has no in-principle objection to 100% 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,” Hockey added.

Under the Chinese group’s proposal, it would acquire the remaining 22% of Yancoal’s issued shares from its minority shareholders in exchange for 0.91 Yanzhou CHESS depositary interests for every share held.