The Chinese Establish a Beachhead

On Tuesday, Australia’s Foreign Investment Review Board and Federal Treasurer gave regulatory approval for Hunan Valin Iron and Steel Group Co. (“Valin”) to acquire 260 million new shares in Fortescue Metals Group (“FMG”), at a purchase price of AUD 644.8 million, thereby increasing its holdings to 17.4%. The level of ownership is below the 17.55% limit agreed between the parties. The proceeds will strengthen FMG’s balance sheet as the company consolidates its base 55 million ton per annum infrastructure platform.

Structured so that it would be a model for investment from China, the structure is simpler than the Chinalco

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