The second of the three big outstanding Chinese investments in Australian natural resources companies has got the nod of approval from Canberra. Hunan Valin Iron and Steel can go ahead with taking a $438 million stake in Fortescue Metals. The decision comes less than a week after Australia barred another state-owned Chinese firm, Minmetals, from taking over OZ Minerals on national security grounds. Minmetals is now reworking its offer to get ground Canberra’s objections.
Hunan Valin isn’t getting an unconditional go ahead: it can’t increase its stake beyond the 17.55% it is now buying and there are some conflict of interest issues to be settled as Hunan Valin is a leading customer of Fortescue. This all leaves the big one to come: a proposed $19.5 billion investment by Chinalco in Rio Tinto. A decision on that is still a couple of months away.
(Update: Minmetals and OZ Minerals have struck a new deal that excludes the Prominent Hill mine near the Woomera weapons-testing range that caused Canberra to block the original proposal. The revised bid is for $1.2 billion and is expected to get official clearance.)