io pilbara nearology. spring rolls

By James Regan
SYDNEY, May 12 (Reuters) - Chinese state-owned steel firms
may be looking for a stake in Australian iron ore miner Fortescue
Metals Group Ltd , in the latest in a growing number of
overtures by Beijing to wield more control over much-needed raw
materials supplies.
The Australian newspaper said on Monday that Sinosteel,
Chinalco and Baosteel <600019.SS> are looking at the 16 percent
stake in Fortescue that U.S. boutique fund Harbinger Capital
Partners was considering selling.
"We're not denying it," Fortescue spokesman Paul Downie said.
"We're not sure if Harbinger is a seller or not."
Harbinger could not be immediately reached for comment.
Fortescue shares were up 1.4 percent at A$9.31 by 0306 GMT,
in a broader market up 0.6 percent.
Any sale to a Chinese group is likely to require permission
from the Australian government, which has raised concerns about
foreign interest in the mining sector.
Australia's treasurer, Wayne Swan, has said foreign
investment was welcome in Australian mining, though
government-owned entities in China and other countries will be
carefully scrutinised before any big investments can proceed.
Chinese steel mills' insatiable appetite for iron ore to feed
strong demand as the economy booms has helped iron ore prices
rise for six straight years, including a 65 percent gain in 2008
alone.
That in turn has raised the allure of Australian miners in
the eyes of China's cashed up enterprises.
Baosteel, China's biggest steel maker, is set to take
delivery of 170,000 tonnes of Fortescue ore, the first of 45
million tonnes the Australian miner aims to ship to China this
year.
"The Chinese want iron ore wherever they can get it and
Australia is the place to get it," said Eagle Mining Research
analyst Keith Goode.
Chinalco, the Chinese aluminium maker that is looking to
diversify into other raw materials, has bought 9.3 percent of
sector heavyweight Rio Tinto Ltd/Plc , Australia's
largest iron ore miner.
Chinalco's $14 billion raid on Rio's London shares in
February was complicating a hostile offer for Rio by Australia's
BHP Billiton Ltd/Plc , a merger the Chinese have
opposed.
Another Australian iron ore start up, Midwest Corp Ltd
, recently recommended a A$1.36 billion ($1.3 billion)
offer from Sinosteel.
Midwest and Murchison Metals Ltd plan to build
railways and a port from scratch to tap vast reserves of iron ore
south of Fortescue's properties in Western Australia. Sinosteel
this month also purchased 2.4 percent of Murchison's stock.
($1=$1.06)
(Reporting by James Regan)
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