By Clancy Yeates
THE federal government will allow a Chinese company to take a significant stake in mining assets in the Woomera prohibited area weapons testing range in South Australia.
The Treasurer, Wayne Swan, said yesterday he would allow Taifeng Yuanchuang International Development to buy a 19.9 per cent of the small iron ore miner IMX Resources and 49 per cent of one of IMX's assets, the Cairn Hill project.
National security concerns had been raised as a risk to the $47 million deal since it was announced in January.
Mr Swan said yesterday he was satisfied the deal would not harm the national interest, provided two conditions were met. First, Outback Iron, the holding company for Cairn Hill, would have to enter into a revised agreement with the Commonwealth regarding access to land in the Woomera area.
Second, the Department of Defence would also have to be satisfied that the deal was in the national interest.
Mr Swan's approval was granted after the close of yesterday's trading session, in which IMX shares fell 2.5 per cent to 39c.
It comes after Mr Swan blocked the Chinese government-owned Minmetals from buying the Prominent Hill copper and gold mine - also in the Woomera area - citing national security concerns. In contrast to Minmetals, Taifeng is privately owned.
OZ Minerals holds an 11 per cent stake in IMX, which is valued at about $90 million.
The federal government last month released guidelines for foreign governments seeking investment in Australia.
A key message was that investment by foreign governments would receive less scrutiny than investment from commercial companies operating at arm's length from government.