Aquila Resources operates in the iron-rich, infrastructure-poor expanses of the southwestern Pilbara in Australia. China’s biggest steel mill, Baosteel, has spent $286.5 million for up to 15% of Aquila.
Baosteel has other joint ventures in Australia, most notably its search for magnetite with Australian iron ore’s third force, Fortescue.
The Australian Foreign Investment Review Board still has to give its approval but assuming this happens this deal represents Baosteel’s first direct stake in an Australian listed company. One of the attractions of Aquila is that it owns potential across the suite of steel raw materials, including metallurgical coal in Queensland, iron ore in the Pilbara, and even manganese in distant South Africa (where it also holds interest in coal and iron ore exploration joint ventures).
Aquila wants to lead a $US4.1 billion ($4.86bn) rail and port project that would link a concert of projects surrounding Rio Tinto’s Robe River rail network, but which currently cannot find a way to market.
Aquila, through its 50 per cent interest in a joint venture called Australian Premium Iron, is talking of a railway that would serve a port at Anketell Point, just to the south of Rio Tinto’s least constrained port, Cape Lambert.
The Australian pointed out that some Austrlian environmalists were making noises but this would not appear to seriously affect this transaction, should it go through.