Australia said Thursday it had approved a bid by China's Wuhan Iron and Steel Co to take a 271 million dollar (246 million US) stake in an iron ore project of miner Centrex.
The Foreign Investments Review Board gave the unconditional green light for Wuhan to take a 60 percent stake of the iron ore rights to five Centrex-owned tenements on South Australia's Eyre Peninsula.
"The company is now well positioned to develop a series of significant iron ore mining operations on Eyre Peninsula and in doing so become a major player in Australia's iron ore industry," said Centrex chairman David Lindh, reporting the approval to the market.
Centrex said it planned to build a new deep-water export port in South Australia in which Wuhan would take a 50 percent stake, pending approval from China's state department of commerce for the deal.
To earn its interest in the iron ore rights, Centrex said Wuhan would pay about 10.1 million dollars to take a 15 percent equity stake in Centrex via a placement of 40 million new shares at a heavily discounted price of 25 cents.
The steelmaker would also inject up to 186 million dollars into Centrex in staged payments as milestones are achieved on the company's iron ore project in South Australia.
Wuhan's interest would fall below the 15 percent foreign investment threshold in the post-issue enlarged capital of Centrex, bypassing the need for a shareholder vote, the Australian miner added.
It is the latest in a string of Chinese bids for Australian resources companies, including the approval last month of Yanzhou Coal's 3.5 billion dollar takeover of miner Felix, the biggest-ever takeover by a Chinese firm.
Wuhan was in September blocked by Australia's defence department from gaining access to a Western Plains Resources project on a sensitive rocket-testing site.
Visiting vice premier Li Keqiang recently urged a sweeping new era in ties with Australia including a free-trade deal, marking a dramatic turnaround in frosty relations which reached crisis-point this year.
Shares in Centrex closed 10.94 percent higher at 71 cents amid a broadly lower market.
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