Regulators allow Chinese investment in JV

Australian regulators have allowed a Chinese state-owned company to take up to a A$40 million stake in a South Australian magnetite joint venture.

The stake will give Baotou Iron and Steel up to 50 per cent of a proposed joint venture with Centrex Metals Ltd to develop the Bungalow magnetite deposit.

Centrex revealed the decision of the Foreign Investment Review Board in a statement to the stock exchange.

In mid-morning trade, shares in Centrex were trading up 4.5 cents, or 6.25 per cent, at 76.5 cents.

Under the deal Baotou, China's tenth biggest steel producer, will pay $8 million towards exploration and study of the site for a 10 per cent interest.

Another $8 million will go to a second round of exploration and $24 million will be spent on the the final phase, to complete a bankable feasibility study.

After all three phases are complete, Baotou will have a 50 per cent stake in the joint venture.

The Chinese company already holds about an 8.3 per cent stake in Centrex, the second largest shareholder.

Centrex will receive a further $2.26 million for exploration expenses incurred since signing the deal agreement on September 20.

Chairman of Centrex, David Lindh, said the FIRB approval was a "significant milestone" for his company.

The Bungalow deposit is near Cowell in South Australia, about 100 kilometres south of Whyalla.

- AAP