By Robb M. Stewart

MELBOURNE, Australia--Rio Tinto PLC's (RIO.LN) deal to sell a large chunk of its coal business for US$2.45 billion to a Chinese company has secured approval from Australia's Foreign Investment Review Board.

Yancoal Australia Ltd. (YAL.AU) on Thursday said FIRB, which advises the federal government, had advised that it had no objection to the acquisition of Rio Tinto's Coal & Allied Industries Ltd. subsidiary.

The deal, which was unveiled by the companies in late January, remains subject to approval by the shareholders of both Rio Tinto and Yanzhou Coal Mining Co.

Yancoal said approval from FIRB was subject to its continued compliance with existing governance conditions, which apply to its current assets.

In 2009, Canberra approved Yanzhou Coal Mining's 3.5 billion Australian dollar (US$2.6 billion) takeover of Felix Resources Ltd. only after it shackled the deal with conditions like listing a unit on the Australian Securities Exchange. At the time, the deal was the biggest Chinese takeover of an Australian company.

Coal & Allied includes Rio's giant coal operation in Australia's Hunter Valley, which the company has been attempting to unload for years, and its Mount Thorley Warkworth mines.

Yancoal said it expected to close the deal in the third quarter.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

April 12, 2017 19:46 ET (23:46 GMT)

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