A Chinese state-owned company is allowed to take up to a 50 percent stake in an Australian mineral development project, Australian Associated Press reported on Thursday.

Centrex Metals Ltd, which is listed on the Australian Securities Exchange, said Australia's Foreign Investment Review Board had agreed Baotou Iron and Steel could invest up to 40 million Australian dollars (37 million U.S. dollars) to develop the Bungalow magnetite ore deposit in South Australia.

Under the deal, Baotou, China's 10th biggest steel producer, will pay 8 million Australian dollars (7.4 million U.S. dollars) towards exploration and study of the site for a 10 percent interest.

The same amount will then go toward a second round of exploration and 24 million Australian dollars (22.2 million U.S. dollars) will be spent on completing a bankable feasibility study. This would give Baotou a 50 percent stake in the joint venture.

The deal is unusual because Australian government guidelines are that Chinese companies should limit their investments in Australia to 15 percent of existing listed companies and less than 50 percent of greenfields projects.

A spokesman for Centrex said the investment was only in this specific project.

Baotou already holds about 8.3 percent of Centrex making it the second largest shareholder.