Baosteel, one of China’s largest steel mills, can take a 19.99% stake in Aquila, although the current investment proposal gives the Chinese company 15% (43.95 million shares) of Aquila at $6.50 per share.

The cash injection will help Aquila develop iron ore, coal and manganese projects in Australia and South Africa.

The company’s key development project in iron ore is the 40% owned West Pilbara Iron Ore project, expected to produce 30-40 million tonnes per annum with shipping through Anketell Port.

Queensland coal projects under development include the 50%-owned Isaac Plains development which will produce 2.8Mtpa; the large, 50% owned Eagle Downs prospect which could produce up to 8Mtpa; and the wholly owned 1.6Mtpa Washpool development.

Under the deal, Baosteel has also agreed to work with Aquila to source low-cost financing from Chinese financial institutions for most of its projects.

Baosteel will also be given preferential opportunity to directly invest in and co-develop most of Aquila’s projects.

Shares in Aquila are up 5.5% to $9.23 this morning.