China's Hunan Valin Iron and Steel Group Thursday said more government approvals are needed for its stake purchase in Australian mining company Fortescue Metals Group.
The National Development and Reform Commission (NDRC), the top economic planning agency, has approved the 1.27 billion Australian dollars (899 million U.S. dollars) investment, Hunan Valin said in a statement on its Web site.
The deal has seen major progress after getting the greenlight from the critically important government agency, it said. "But it needs further approvals from the Ministry of Commerce and the State Administration of Foreign Exchange."
According to the deal, Hunan Valin will hold a 17.4-percent stake of Fortescue, making it the second-largest shareholder of Australia's third-largest iron ore producer.
On March 31, the Australian government approved Hunan Valin's application to buy no more than 17.55 percent of Fortescue.
Li Xiaowei, group chairman, said the deal was a step forward in the company's overseas expansion. Earlier cooperation with Arcelor Mittal, the world's largest steel company, has brought it advanced management expertise and steel technology, he noted.
"The investment was mainly aimed at helping ensure a stable supply of production materials," he said in the statement.
Because Fortescue's main customers are in China, the deal also would help the management, production and sales at the Australian mining company, Li added.
Fortescue has agreed to increase iron ore supplies to Hunan Valin and the two have agreed to jointly develop new technologies on processing low-grade iron ores, said the statement.
(Xinhua News Agency April 23, 2009)