Australia has granted China’s Yanzhou Coal Mining permission to buy Felix Resources and operate it from an Australian headquartered company called Yancoal.

Yanzhou also must place its other Australian assets under the parent company, including its Austar mine.

The news – which could see the largest outside investment yet made in Australia’s minerals sector – sent shares of Felix up this morning by more than 4%.

Yanzhou Coal Mining has offered to buy Felix, valued at $3.2bn.

Several of Felix’s mines are operated as part of a joint venture or with third parties and the deal requires Yangzhou to allow outside ownership of 50% of Felix’s assets according to Australian Assistant Treasurer Nick Sherry.

“It represents the first time a Chinese state-owned enterprise operating in Australia will list on our stock exchange,” Sherry said.

“Yanzhou will continue all four of the Felix mining operations, including completing the development of the Moolarben mine – this will create more jobs for both New South Wales and Queensland.”

Felix’s projects include two in New South Wales and two in Queensland, three of which are in production. The Moolarben mine in the Hunter Valley is still under development.

Yanzhou welcomed the decision and said the plan still needs Chinese regulatory and shareholder approval.

Yanzhou said it welcomed the news and was waiting on shareholder and board approval before progressing with a deal.