FMG and China's Sinosteel signed a binding memorandum of understanding for a 12-month rapid project assessment of the Mid West project, with the assessment to include a rail and port development at Oakajee.

Subject to the outcome of the assessment, FMG has the option to acquire 50% of the project and take ownership of the proposed port and rail infrastructure project.

Outgoing-FMG CEO Elizabeth Gaines said the signing of the MoU was part of FMG's strategy to expand into new regions.

"We look forward to working with Sinosteel on the next steps for this important project for Western Australia, which, in addition to the magnetite and infrastructure development, offers the opportunity for a coordinated project combining Fortescue's iron ore and infrastructure pedigree with Fortescue Future Industries' green energy objectives," she said.

"Future development including a renewable, green hydrogen hub in the Mid West region at Oakajee would deliver a large-scale resources and renewables project for WA, further underpinning our enduring relationship with China."

Sinosteel president Andong Liu said the company had long cherished developing a world-class magnetite project in the area.

"This world-class project is reflected not only in the scale of resources, ore processing characteristics and product quality, but also in the huge renewable energy potential," he said.

"In this cherished land of the Mid West, we are confident that together with Fortescue we will make the Midwest a low-carbon, green, high-quality iron ore centre and lead a new era of magnetite development."