Fortescue Metal Group says it has held talks with two foreign companies about investment opportunities, that may include buying stakes in the firm.

The iron ore producer said the talks are preliminary.

Fortescue shares rose as much as 25% in afternoon trade, but eased to trade up 10% at $2.92 after the statement was put out.

“Fortescue can confirm that there have been recent meetings and site visits with representatives of these companies to explore investment opportunities,” it said today in a letter to the ASX.

The exchange had asked Fortescue to comment on news reports that it was in talks with mining giant Anglo American and China Investment Corp, a $US200 billion ($313 billion)  sovereign wealth fund.

“The Chinese are definitely looking for opportunities,” said John Veldhuizen, a mining analyst at BBY Ltd. Fortescue “will need capital down the road to develop and expand and if there is an opportunity I can’t see why that wouldn’t be pursued” he said.

Fortescue said it had hired financial advisory specialists JPMorgan, Grant Samuel and Azure Capital to evaluate the approaches.

“These discussions are preliminary and incomplete and do not warrant disclosure,” it added.

The Herald Sun today reported Anglo American and CIC were in talks to take a stake in Australia’s third largest iron ore miner.

“We have and continue to receive a number of approaches from various parties,” Fortescue spokesman Cameron Morse said.

Fortescue’s founder and chief executive, Andrew Forrest, who owns 39% of the group, has repeatedly said he would welcome Chinese investment in the company. Fortescue sells all its iron ore to more than two dozen steel mills in China.

Executives from CIC visited the Perth office of Fortescue last week and representatives of Anglo American also visited Fortescue’s iron ore mine in Western Australia’s Pilbara, the Herald Sun said.

Anglo American, which controls the worlds biggest platinum producer, has said it’s looking to buy assets at the “bottom of the cycle”.

The talks come on the heels of two major deals over the past week involving Chinese investment in Australian resources.
State-owned aluminium maker Chinalco agreed last week to pay $US19.5 billion ($30 billion) for stakes in global giant Rio Tinto’s aluminium, copper and iron ore assets and convertible notes.

This week state-owned metals trader Minmetals made a $2.6 billion bid for debt-burdened OZ Minerals, the world’s no.2 zinc miner.

Both deals need to be cleared by Treasurer Wayne Swan.

Two sources said talks involving Fortescue were at very early stages and it was not clear whether any Chinese investment in Fortescue would go beyond the 15% threshold that would require Federal Government approval.

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http://business.smh.com.au/business/fortescue-in-talks-with-anglo-china-20090218-8b5j.html?sssdmh=dm16.361465