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CHINA'S Anshan Iron & Steel Group Corp has been asked to re-submit its application to Australia's foreign investment review board to buy a $162 million stake in Gindalbie Metals.

The move, which could delay a go-ahead for the $1.8 billion Karara iron ore project, may increase worries among cash-strapped miners that the Australian Government is delaying decisions on a host of Chinese investment applications.

“In recent days AnSteel was asked to re-submit its application,” a person familiar with the situation has told Dow Jones Newswires.

“The 30-day limit was coming up and a decision wasn’t going to be made in time, so they were asked to withdraw it and re-submit.”

A spokesman for Treasurer Wayne Swan, who will make the final decision on the application, wouldn’t comment.

An AnSteel spokesman wasn’t immediately available for comment. But earlier this month AnSteel chairman Zhang Xiaogang said he was confident the Chinese company would receive approval from the Australian Government.

The Gindalbie investment is also subject to approval from China’s Ministry Of Commerce, Mr Zhang said at that time.

AnSteel is applying to increase its Gindalbie stake to 36.3 per cent from 12.6 per cent, via a placement of new shares.

Gindalbie shareholders approved the deal early last month and AnSteel lodged its FIRB application in mid-to-late February, the person said.

FIRB usually commits to making a decision on an investment in 30 days of receiving an application. It can extend that decision by a further 90 days.

By asking AnSteel to re-submit, FIRB will have another 30 days to consider the deal with the option of further extensions to the process.

Gindalbie and AnSteel are joint owners of Karara, a Western Australian iron ore development that would employ around 1200 people during construction.

The delay comes as Australia’s Government considers a raft of Chinese mining investment proposals, including the $US19.5 billion investment by Chinalco in Rio Tinto .

FIRB is also probing a $2.6 billion takeover offer for OZ Minerals by China’s Minmetals.

FIRB considers whether the individual deals are in Australia’s national interest before making recommendations to Treasurer Swan.

There has been growing opposition this week to the Chinalco deal, and Rio shares fell 8.7 per cent on Wednesday as investors speculated that the Australian government may reject the deal.

FIRB this week extended its examination into the Chinalco deal by as long as 90 days.

Perth-based Gindalbie has already experienced significant delays on Karara, where it has spent $200 million to date on exploration and feasibility studies.

AnSteel bought into the venture in 2006 and it was initially due to start exports in mid-2008.

However the partners have been held back by a lengthy environmental approvals process, and are still waiting on final Western Australian state government go-aheads.

Last month Gindalbie chairman George Jones said that he was “concerned” about political delays in sanctioning the AnSteel deal.