China’s Yancoal says Australia mine deal gives it power over Asia-Pacific price-setting

Chinese miner Yancoal has said its purchase of Rio Tinto’s Australian thermal coal mines will give the organisation power over price-setting in the Asia-Pacific market.

Jin Qingbin, the board secretary of Yancoal’s parent company Yanzhou, said that the deal will allow the Chinese company to “take a leading role” in “Japan/Australia thermal coal negotiations”.

In the past thermal coal from the mines Yancoal is attempting to purchase has been sold to Japan and Korea.

The Yancoal deal is expected to give China greater geopolitical influence over Japan and Korea’s energy security.

Yancoal’s purchase of Rio Tinto’s Hunter Valley assets would, if successful, make it the largest pure-play coal company in Australia, and give it the largest footprint in the Hunter Valley, a premium thermal coal mining region in Australia.

The deal would also give Yancoal a significant stake in Newcastle Port, the world’s largest coal export terminal.

The Chinese company is trying to raise AUD $3.2 billion in equity to buy the stake in the Australian coal business.

Yancoal this week posted losses of $227 million in 2016, the fourth consecutive year without profit.

The deal still has a series of commercial and regulatory hurdles to meet before it is completed.

It will first be subject to a shareholder vote and then approval by Australia’s Foreign Investment Review Board, which has previously vetoed Chinese investment in the country.