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China approves deal with Australia's Fortescue
Sydney (AFP) April 22, 2009 Australian miner Fortescue Metals said Wednesday that Beijing's development regulator had approved a one billion dollar (700 million US) tie-up with China's state-owned Hunan Valin Iron and Steel Group. The investment, which was last month approved by Canberra, was Wednesday given the green light by China's National Development and Reform Commission (NDRC), Fortescue said. "The NDRC approval was the key milestone for the transaction and paves the way for the Chinese ministry of commerce and the state administration of foreign exchange to formalise the agreement," it said in a statement to the Australian Stock Exchange. "Once this is done all conditions under the agreement will have been satisfied to enable Valin to proceed with its acquisition of 260 million new Fortescue shares ... to raise 644.8 million Australian dollars in new equity capital," it added. The placement, when combined with Fortescue shares that Valin bought separately from an institutional investor earlier this year, will take the Chinese firm's stake in the miner to 17.33 percent, or 535 million shares. Fortescue said that would make Valin its second-largest shareholder. Valin has a 9.79 percent stake in the Australian firm at the moment. Canberra is currently considering whether to approve two other bids from Chinese state-owned firms to buy significant stakes in resources firms OZ Minerals and Rio Tinto. Until recently, the Australian economy was riding a resources boom driven by China's need for raw materials to fuel its rapid industrial expansion. But the global downturn has left many firms weighed down by debt while cash-rich Chinese firms have moved into the sector. In approving the Fortescue deal, the Australian government insisted that Valin's stake remain under 17.55 percent and that any Valin representative on the Fortescue board comply with measures to prevent conflicts of interest. Share This Article With Planet Earth
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