Australia has once again turned down an investment plan by a Chinese company in a proposed mine near an outback missile testing range, citing security concerns.

Australia's Defense Department knocked back the proposed bid by Wugang Australia Resources, a wholly owned subsidiary of Wuhan Iron and Steel Corp (Wisco), to buy half of the Hawks Nest magnetite mine, which falls within the Woomera prohibited military range.

Under the joint venture proposal, Wugang Resources was set to receive 21.1 million shares in Western Plains, Wugang's proposed Australian partner in the mine, and a 50-percent stake in the project for A$45 million.

It is the second time this year that the Australian Defense Department has vetoed an application from a Chinese company for investment near the Woomera prohibited area.

In March, the government blocked China Minmetals Nonferrous Metals Co from buying Australian miner Oz Minerals Ltd for AU$2.6 billion because one of the assets, the Prominent Hill gold and copper mine, was within the range precincts. China Minmetals eventually bought Oz Minerals minus the mine for AU$1.7 billion.

Industry insiders said Australian mining companies have generally welcomed Chinese investors, as they needed capital to expand their businesses. However, China's eagerness to extend its footprint in the Australian resources sector has triggered tensions.

"On the one hand, Australia welcomes Chinese investment as it knows its economic development cannot ignore China, but on the other, it hopes it can get the most benefits in the cooperation and is reluctant to see Chinese companies taking the major stake in the resources sector," said Yu Liangui, director of research center at Mysteel.

Zou Weimin, chairman of the Metallurgical Corporation of China Overseas Ltd, told China Daily in a July interview that he had not seen a favorable attitude by the Australian government toward Chinese companies investing in mines in the country.

But Australian DM John Faulkner said while other mines had been allowed within the Woomera area, the problem with the Hawks Nest mine was that it was in the missile firing line, and it was not because it was Chinese in origin.

"China has all along held an open attitude toward foreign enterprises investing in China, and we hope other countries will take the same stance on Chinese companies (intending to invest there)," Chinese Foreign Ministry Spokeswoman Jiang Yu said yesterday.

(China Daily September 25, 2009)