Economy

Markets

Industries

Insights

Reports

Events

Australia allows Chinese company's stake in mining project

(Xinhua)
Updated: 2009-11-20 08:55

A Chinese State-owned company is allowed to take up to a 50 percent stake in an Australian mining development project, Australian Associated Press reported on Thursday.

Centrex Metals Ltd, which is listed on the Australian Securities Exchange, said Australia's Foreign Investment Review Board had agreed Baotou Iron and Steel could invest up to A$40 million ($37 million) to develop the Bungalow magnetite ore deposit in South Australia.

Under the deal, Baotou, China's 10th biggest steel producer, will pay A$8 million towards exploration and study of the site for a 10 percent interest.

Related readings:  Centrex shares soar as Oz govt approves Wugang investment  Australian gov't approves Chinese investment in Centrex  Baotou Steel to invest in pellet project  Baotou Steel sees 748m yuan loss in H1

The same amount will then go toward a second round of exploration and A$24 million will be spent on completing a bankable feasibility study. This would give Baotou a 50 percent stake in the joint venture.

The deal is unusual because Australian government guidelines are that Chinese companies should limit their investments in Australia to 15 percent of existing listed companies and less than 50 percent of greenfields projects.

A spokesman for Centrex said the investment was only in this specific project.

Baotou already holds about 8.3 percent of Centrex making it the second largest shareholder.