Swan approves Chinese Fortescue stake

The federal government has approved Chinese state-owned steelmaker Hunan Valin Iron
and Steel Group's 17.55 per cent shareholding in Fortescue Metals Group, Treasurer
Wayne Swan says.
This will be subject to formal and strict undertakings Mr Swan has sought from Hunan
Valin, and agreed to by Fortescue.
These undertaking include any person nominated by Hunan Valin to Fortescue's board
will comply with the Directors Code of Conduct maintained by Fortescue.
A nominated person must submit any potential conflict of interest relating to
Fortescue's marketing, sales, customer profiles, price setting and cost structures
for pricing and shipping.
Hunan Valin and any person nominated to Fortescue's board will comply with the
information segregation arrangements agreed between Fortescue and Hunan Valin.
Hunan Valin will report to Foreign Investment Review Board (FIRB) on its compliance
with these undertakings.
"These undertakings ensure consistency with Australia's national interest principles
for investments by foreign government entities, which I set out in February 2008,"
Mr Swan said.
"They ensure the appropriate separation of Fortescue's commercial operations and
customer interests, and support the market-based development of Australia's
resources."
Non-compliance with these undertakings can lead to the directors removal from the
company board.
Fortescues was involved in negotiating these arrangements.
Under the proposal, Fortescue has agreed to issue new shares to Hunan Valin to raise
funds for the next expansion phase of its iron ore mining operations in the Pilbara.
Hunan Valin also intends to acquire some shares from other shareholders.
"Consistent with this approval and with its agreement with Fortescue, Hunan Valin
will not hold above 17.55 per cent in total," Mr Swan said.
"It is on these bases that I have approved the acquisition under the Foreign
Acquisitions and Takeovers Act 1975," Mr Swan said.