Chinese investments in Australia make progress

The Australian government yesterday approved the acquisition of a 17.4% stake in Fortescue Metals Group by Chinese steel maker Hunan Valin Iron and Steel Group Company. Meanwhile, Oz Minerals announced that China Minmetals will shortly table a revised proposal to acquire most of its assets.

While announcing the approval for Valin under the Foreign Acquisitions and Takeovers Act (FATA), Australian treasurer Wayne Swan also outlined the conditions that the approval is subject to and which Valin and Fortescue are both bound by.

Valin is permitted to own a maximum of 17.55% of Fortescue. The Valin nominee on the board of Fortescue will have to declare upfront any "potential conflict of interest relating to Fortescue's marketing, sales, customer profiles, price setting and cost structures for pricing and shipping".

The conditions are intended to ensure the "appropriate separation of Fortescue's commercial operations and customer interests, and support the market-based development of Australia's resources", the treasurer's statement goes on to say.