The largest acquisition by a Chinese government entity of Australian assets has been greenlighted with the Foreign Investment Review Board recommending the $US2.5 billion ($3.3 billion) purchase of Rio Tinto's suite of NSW coal assets.

The buyer is Yancoal Australia, which is 78 per cent owned by Yanzhou Coal Mining Co of Hong Kong, which is in turn controlled by an arm of the Chinese government.

Yancoal Australia has won FIRB approval for $US2.5b coal mine buy Credit:Peter Rae

Chinese bids to acquire Australian assets have been controversial, with a string of planned acquisitions - from Ausgrid to the Kidman rural empire - blocked.

However the state-owned utility State Power Investment Corp's purchase of Pacific Hydro, a renewable energy company for an estimated $3 billion acquisition - which also included borrowings - was approved a little over a year ago, along with its purchase of the Taralga Wind for an estimated $300 million, also including debt.