“The Yanzhou deal is a very good deal for Australia and China,” he told Dow Jones Newswires.

“The acquisition demonstrates Australia’s openness to foreign investment.”

Felix delisted from the Australian Securities Exchange at the end of 2009 and is now controlled by Yanzhou’s local subsidiary, Yancoal Australia, which operates the Austar coal mine in the Hunter Valley.

As part of the approved acquisition, Yancoal will be listed on the ASX by the end of 2012 and Yanzhou’s ownership must be reduced to less than 70% by that time.

The cashed-up Chinese coal producer is set to continue the development of Felix’s Moolarben mine, which is expected to produce 6 million tonnes of thermal coal in 2010, with 4.5Mt destined for export and 1.5Mt for the domestic market.

Full ramp-up will have Moolarben exporting up to 13Mt per annum of product coal for export and domestic markets, with 8.8Mtpa from open cut and 4-4.2Mtpa from longwall mining.

Under stage two plans, Felix is seeking approval for up to 17Mtpa run-of-mine production, with 8Mtpa from longwall mining and the rest from four open cuts.

The acquisition of Felix’s portfolio of mines in New South Wales will give Yancoal potential coal blending opportunities and synergies with its Austar operation.

Yanzhou launched its takeover in August offering $16.95 a share, but Felix’s two fully franked 50c dividends and a planned post-takeover 5c spin-off listing of its South Australian Coal Corporation subsidiary brought the package to $18 a share.