Yancoal expressed its interest after ACM asked it and BHP whether the Foreign Investment Review Board had objected to them doing business.

BHP has declined to comment on "rumours" since the ACM inquired about a sale to Yancoal a year ago.

More details of a sale process - including the hiring of consultants - have surfaced recently in financial media and industry journals, but BHP again declined to comment this week, as did the investment review board.

The putative buyer said: "Yancoal considers acquisitive growth opportunities as they arise, such as BHP's thermal coal assets, and is committed to only acquiring appropriately priced assets of genuine future value."

Federal Labor MP Joel Fitzgibbon, whose electorate of Hunter includes Mt Arthur, said "any Yancoal proposition should go to the FIRB".

"It may be that the FIRB knows something we don't, but it's hard to see it having any significant concern given Yancoal already has a huge footprint in the Hunter," Mr Fitzgibbon said.

"The company has proven itself to be a employer and of course, it is well placed to provide good access to the China market."

Yancoal and the Swiss-based Glencore are already the two biggest mine owners in the Newcastle export coal market, and a Yancoal purchase of Mt Arthur would add as much as 32 million tonnes a year to its capacity.

It can go to 36 million tonnes with an underground mine approved in 2008.

Yancoal bought its first Hunter mine in 2004 and had grown substantially by the time it bought Rio Tinto's stakes in the Hunter Valley Operations (now run as a joint venture with Glencore) and Mount Thorley/Warkworth mines in 2017.

Yancoal is the largest shareholder in PWCS, operator of two Newcastle coal terminals.

It would have 55 per cent of NCIG, the port's third loader, if it bought BHP's stake.

Yancoal is listed on the Australian stock exchange and names its largest shareholders as Chinese companies Yanzhou Coal (62.6 per cent) and Cinda International (15.89 per cent).

Yanzhou is in turn controlled by Yankuang Group, described on its English language website as "an extra-large state-owned-enterprise".

The Morrison government "temporarily" tightened foreign investment rules in late March, saying that Australian businesses suffering financial distress because of COVID-19 could end up being "sold to foreign interests without any government oversight, presenting risks to the national interest".

Asked whether the investment review board had looked at a Yancoal purchase of Mt Arthur, a federal government spokesperson said: "Treasury does not comment on the application of the foreign investment screening arrangements as they apply or could apply to particular cases."

ACM was told the new rules would not preclude a Yancoal purchase.

In its latest annual report, the review board says its "functions are advisory only", with the treasurer of the day responsible "for making decisions on foreign investment policy and investment proposals".