She told a media briefing in Sydney that Boasteel had held a 19.8% stake in Aquila since 2009 but ran out of patience with Aquila management after attempts to organise funding with China Development Bank Corp failed amid an uncertain future over iron ore supply agreements.

“Our original investment is to support Aquila to develop its major projects but after five years, we haven’t seen any projects being started,” Wu said.

“We’ve become frustrated, so what we’re going to do now is to get things started.”

Aquila will form an independent board sub-committee to evaluate the offer and has appointed Goldman Sachs as its financial advisor and King & Wood Mallesons as its legal advisor.

Wu is confident the West Pilbara iron ore project will be competitive despite projections of the iron ore price softening to below $100 per tonne as more supply comes onstream.

“Baosteel is very careful in selecting good projects,” she said.

“Even in a bad market environment we can find low cost competitive projects.”

Aurizon CEO Lance Hockridge said Baosteel was a “world class customer and partner with a demonstrated track record as an investor in Australia”

Hockridge said the West Pilbara iron ore project provided the ideal platform for Aurizon – formerly centred in Queensland – to expand its rail and logistics business into the Pilbara.

“This is a very prospective opportunity for us that should offer good returns,” he said.

“This proposal represents an unprecedented opportunity to co-develop world-class rail and port infrastructure in Australia, utilising Chinese and Australian capital, to deliver much needed Australian commodities to China.

“[It] is an excellent strategic fit for both companies.

“It would allow Aurizon to capitalise on expertise as a builder and operator of nationally significant export supply chains, matched with the ongoing investment in Australian resources by one of China's largest iron and steel producers.

“This project has potential to deliver new independent multi-user rail and port infrastructure that would create new options for mid-tier miners and increase competition for bulk logistics delivery in the Pilbara.”

Wu says the company will look carefully at Aquila’s coal projects, which include a 50% share of the Eagle Downs hard coking coal project in joint venture with the Brazilian giant Vale and the Washpool project.

Eagle Downs is expected to produce 4.5 million tonnes per annum over its first 10 years of production using traditional longwall underground mining methods.

The project has a mine life of up to 47 years.

Washpool is a greenfield hard coking coal project located in Queensland’s Bowen Basin, approximately 24km northwest of Blackwater.

Aquila has completed a definitive feasibility study at Washpool and a subsequent supplementary study, which proposes a 2.9Mtpa open cut HCC export operation with a 15-year mine life.