Australian regulator asks Baosteel to resubmit application for Aquila Resources

Foreign Investment Review Board (FIRB) has asked China's state-owned Baosteel to resubmit its application to acquire a 15 per cent holding in coal, iron ore and manganese explorer Aquila Resources Ltd.

Baosteel, China's largest steelmaker and third largest steel producer in the world, had proposed a strategic investment of a 15-per cent stake in Aquila Resources in August, worth $240 million to secure supplies of iron ore, coking coal and manganese. (See: Baosteel acquires 15-per cent stake in Australian iron ore miner Aquila Resources)

Through the proposed deal, Shanghai-based Baosteel would get a board seat in the Perth-based Aquila and had said that its investment would help the miner to fast track the development of its key iron ore, coal and manganese projects.

It also said that it would assist Aquila in sourcing low-cost financing from Chinese institutions for a number of the company's projects, including the strategic West Pilbara Iron Ore Project.

Baosteel was asked to resubmit its application by the FIRB this week, which the Chinese steelmaker has done. But no explanation was given as to why the regulator had made the request.

Deals between state-owned Chinese companies and Australian counterparts in the resources sector have evoked widespread political debate and criticism in Australia.