Yanzhou Coal Mining, the listed unit of China's fourth-largest coal miner, Yankuang Group, is close to taking control of Australia's Gloucester Coal. The deal would see Yanzhou inject its existing Australian assets into listed Gloucester.
The move would allow Yanzhou to meet its commitment to Australian securities regulators to float at least 30 per cent of its Australian assets on the nation's bourse by the end of next year, according to two people familiar with the matter, who asked not to be named since they were not authorised to comment on the deal.
The deal would also help Yanzhou meet its target to raise overseas annual output to 50 million tonnes in 2015 from about 10 million tonnes this year. The company aims to almost triple total output to 150 million tonnes in 2015 from last year.
Yanzhou plans to buy Gloucester for at least A$2 billion (HK$15.47 billion), Bloomberg quoted an unnamed person with knowledge of the matter as saying. The person said Yanzhou would use the Gloucester purchase as a means of listing its own existing Australian assets, which consist of three coal mining firms.
One way to achieve this would be for Gloucester to issue a large amount of new shares to Yanzhou, in exchange for the latter's existing Australian assets, said one source.
This would result in a so-called reverse takeover, in which Gloucester, with a market value of A$1.4 billion, would acquire Yanzhou's bigger portfolio of assets in Australia, which includes Felix Resources, which it bought in 2009 for A$3.7 billion.
This would substantially dilute the 63 per cent stake of Gloucester's parent, Singapore-listed international commodities trader and supply chain manager Noble Group.
