Australia's Foreign Investment Review Board has approved Chinese coal producer Haohua Energy International's plan for a $100 million share placement with ASX-listed Coal of Africa, CoAL said Wednesday.
In October, CoAL said it had agreed to the investment by HEI, a subsidiary of China's Beijing Haohua Energy Resources, after South Africa's Exxaro chose not to take up its option to participate in the development of CoAL's Makhado coking coal project in South Africa.
Exxaro cited negative sentiment surrounding global and local market growth prospects at the time of opting out.
HEI's investment in CoAL is expected to speed up the development of CoAL's projects and provide direct exposure to the world's largest coking coal market in China.
"Following the granting of FIRB approval, HEI and CoAL will execute an escrow release letter pursuant to which the deposit of $20 million currently held in the escrow account will be transferred to CoAL," CoAL said Wednesday.
Approval by Chinese regulatory authorities is expected to be achieved by the end of January 2013.
The placement deal will be the first investment outside China for HEI.
The company is based in Beijing and is involved in the mining, washing, export and sales of coal products. It is also the largest anthracite coal exporter in China.
CoAL operates the Vele mine in South Africa, which has capacity of 1 million mt/year of coking coal and is also developing the Makhado project, currently in feasibility study stage, that will produce 2.2 million-2.5 million mt/year of coking coal.
CoAL is also developing several thermal coal projects in South Africa.
