With more and more foreign businesses wanting to invest and partake in Australia's huge and abundant mining industry, federal authorities are disturbed resources might all be consumed by foreign partners and none will be left for the locals to use.

Western Australia's Premier Colin Barnett on Wednesday voiced his concerns of China's pending stake acquisition into Premier Coal mine. While he cleared he is not against the sale, he is particularly keen how the arrangement could affect local supply, especially since Premier Coal is the major supplier of coal to government-owned coal power stations as well as and domestic industrial companies.

"Indeed while these are private companies, the coal does belong to the state and there are provisions in the state agreement that ensure the coal is reserved for state domestic use," Barnett was quoted by AFP on ABC radio.

Australian firm Wesfarmers Ltd. has agreed to sell Premier Coal to Yanzhou Coal Mining Co. of China for US$293 million. The coal-mining business, located in southwestern Australia, produces about 3.5 million metric tonnes of thermal coal annually.

"We will certainly make sure that the security of coal supply to Verve and private customers is maintained. The coal belongs to the state. There are provisions in the state agreement to ensure coal is preserved for domestic use and can't be exported without the approval of the state government," Barnet told The Australian.

Majority of Premier Coal's production is sold to government-owned utility Verve Energy and smaller quantities to industrial companies including mineral-sands miner Iluka Resources Ltd.

The planned Premier Coal sell-off follows the $800 million acquisition by Indian power giant Lanco Infratech of Griffin Coal in March this year. These two mines are the prime suppliers of power stations supplying almost all of the state's electricity.

The deal is still subject for approval of Australian and Chinese regulators. If it is, Wesfarmers stands to gain an additional A$90 million in pretax profit in the company's second-half results this year.

Barnett said he does not see the state opposing the sale.

The Premier Coal deal would be the largest Australian acquisition by Yanzhou since its A$3.5 billion takeover of Felix Resources Ltd. in 2009. The Chinese company has five mines in NSW and Queensland, producing about 11 million tonnes of thermal and metallurgical coal each year.

Yanzhou plans to expand the Premier Coal mine to allow exports to China.

Both representatives from Wesfarmers Ltd. and Yanzhou Coal Mining Co. welcomed Barnett's apprehensions, and said they will call on meetings to discuss the federal officer's issues.