Wuhan Iron and Steel Group, China’s third largest steel producer, has agreed to buy a 50 per cent stake in Western Plains Resources’ Hawks Nest project in South Australia.

The two companies will set up a 50-50 joint venture to develop the site, which has estimated iron ore deposits of 5.7m tons. The Chinese company will initially invest AU$25m in a feasibility study and then a further AU$20m for future operations, Western Plains said, adding that the stake will be capped at 50 per cent.


The transaction is subject to approval of government authorities in both countries.

China, the world’s top steel producer and consumer, is seeking to secure more long-term iron ore supplies overseas via acquisitions or by taking project stakes.