Not long ago Australian iron ore was all the rage. Thanks in part to China’s seemingly endless appetite for steel, mining companies sprung up throughout Western Australia. Many listed on the stock exchange on the strength of their exploratory findings alone. One of the first casualties of the economic downturn were commodities prices. Faced with a more realistic market, Australia’s iron ore miners need cash – and China is still in a position to provide it. Today it is reported that Hunan Valin Iron and Steel plans to invest US$318 million in Fortescue Metals as part of a US$1.91 billion funding package for the company. The landmark iron ore investment was, of course, Aluminum Corp of China (Chinalco) buying into Rio Tinto – and then pumping in a further US$19.5 billion as the mining giant struggled with its debts. Now it appears Chinalco Chairman Xiao Yaqing will be rewarded for his deal-making savvy with a seat on the State Council. Should Xiao cross move from the corporate arena into government (we’ve heard there is a Communist Party-sponsored shuttle service between the two), one of his first duties may be to sort out the steel industry. Beijing is keen to get rid of surplus production capacity and relocate steel mills closer to raw materials. Australian miners shouldn’t worry – China’s steel industry will remain hungry for quite some time yet.