After a two-month wait, China's largest steelmaker, Baosteel, has been given a nod of approval from the Australian Foreign Investment Review Board to invest US$240 million in return for a 15 percent stake in Aquila Resources Ltd.

According to the agreement, Baosteel's vice president Dai Zhihao will be given a seat on the Aquila board.

Perth-based mining company, Aquila produces iron ore, coal and manganese. The Aquila purchase marks a significant step forward in Baosteel's internationalization strategy.

Baosteel's bid for a stake in Aquila was first reported on August 27 this year. In an initial agreement, Baosteel agreed to buy 43.95 million shares worth US$240 million to become the firm's second largest shareholder.

If successful, the acquisition will be a win-win deal in which Baosteel can directly invest in or participate in the development of most Aquila projects and Aquila will be able to tap into low-cost finance from Chinese banks. The two parties have also signed strategic cooperation memoranda that pave the way for further cooperation on energy projects.

Experts said that Chinese steel makers' bids for stakes in overseas miners reflect China's efforts to gain a greater voice in iron ore talks, but because few bids have so far succeeded it is unlikely to challenge Rio Tinto, BHP Billiton and Brazil's Vale's dominance in iron ore supply in the short term.