Australia approves China investment in ore firm

SYDNEY Nov 5 (Reuters) - Wuhan Iron & Steel (600005.SS), China's third largest steel group, has won Australian government approval to invest A$271 million ($247 million) in iron ore developer Centrex Metals Ltd (CXM.AX), Centrex said on Thursday.

Under the deal, Wuhan Iron will take a 15 percent stake in Centrex and form a joint venture with Centrex to develop iron ore resources in South Australia state, which Centrex said could contain up to two billion tonnes of ore.

Wuhan will also inject additional capital into Centrex.

Centrex shares stood 9.4 percent higher at A$0.70 at 0252 GMT in a broader market .AXJO down 0.6 percent.

The approval of the deal by Australia's Foreign Investment Review Board follows the granting of permission last month for Chinese steel maker Baosteel (600019.SS) to take a 15 percent stake in iron ore explorer Aquila Resources (AQA.AX).

Chinese attempts to buy into Australia's lucrative resources industry have strained ties between the two countries.

But China's ambassador to Australia, Zhang Junsai, said last week both countries had come to a consensus that they must manage their differences. ($1=1.098 Australian Dollar) (Reporting by Bruce Hextall)