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FIRB to approve Chinese investment in Centrex projectFont Size: Decrease Increase Print Page: Print Sarah-Jane Tasker | November 04, 2009
Article from: The Australian
SOUTH Australian iron ore hopeful Centrex Metals is set to be the next company granted approval by the Foreign Investment Review Board to allow Chinese investment in one of its projects.

Centrex went into a trading halt yesterday, citing a decision from FIRB on state-owned

Wuhan Iron & Steel Company's $234 million investment for a

60 per cent stake in a joint venture project and a 12.9 per cent stake in Centrex, was imminent.

If the deal is approved, it will be FIRB's fifth approval of Chinese investment in the mining sector in the past three weeks.

Centrex already has a Chinese firm on its register, with another state-owned steelmaker, Baotau Iron and Steel, holding an 8.13 per cent stake in the junior.

In August, Centrex signed a $40m deal with Baotau to jointly develop another group of South Australian magnetite iron ore assets in a deal before the FIRB.

The flood of approvals has added to the confusion about the level of Chinese investment the government will allow.

Last month, FIRB executive director Patrick Colmer said the government preferred foreign investment in undeveloped mineral deposits to stay below 50 per cent, and for investment in "major producers" to stay below 15 per cent.

But Yanzhou Coal's $3.5bn takeover of Felix Resources was approved on the condition it relist more than 30 per cent of the company by 2013.

China's biggest steelmaker, Baosteel, was the most recent to get the go ahead for its 19.99 per cent stake in Aquila Resources.

Peter Vaughan, a partner at Blake Dawson, said while there had been an increase in approvals, there had also been stringent conditions placed on the applications from state-owned entities.

"The government has been clear they have been looking at that more closely, especially around issues of security or national interest and market control," he said.

"There has not been a major shift in policy change, but a lot of people just got confused by some of the comments that had been made and maybe taken out of context.

"We are seeing more approvals come through because they fit within the normal conditions of approval."