Baosteel will invest the cash via a 15% placement (43.95 million shares) at $6.50. On the back of the news, Aquila’s shares had jumped 11.3% to $7.29 by mid-morning today.

“This is a transforming event for Aquila. China’s largest steelmaker has established a strategic cooperation with Aquila, not only to make a major investment in the company, but also to advance participation in some of the important projects in the company’s portfolio,” Aquila said this morning.

Under the deal, Baosteel has agreed to work with Aquila to source low-cost financing from Chinese financial institutions for most of its projects.

Baosteel also has a preferential opportunity to directly invest in and codevelop most of Aquila’s projects.

Aquila said with low-cost financing from China and the backing of Baosteel, its advanced projects would be developed on time.

As well as its 40%-owned West Pilbara Iron Ore development, which is expected to produce 30-40 million tonnes per annum with shipping through Anketell Port, Aquila’s advanced projects include the smaller, 74%-owned Thabazimbi project in South Africa, expected to produce 2.5Mtpa.

Queensland coal projects on the cards include the 50%-owned Isaac Plains development to produce 2.8Mtpa; the large, 50%-owned Eagle Downs prospect which could produce up to 8Mtpa; and the wholly owned 1.6Mtpa Washpool development.

In manganese, Aquila has a 74% stake in the 1Mtpa Avontuur development in South Africa.

For Baosteel, the deal means it can secure a new source of raw materials. Long-term offtake deals are expected to be struck once the projects go into production.

Aquila said the two companies would also work towards a joint sales arrangement where Aquila’s, and potentially Baosteel’s, share of production is sold into China.

Baosteel vice-president Dai Zhihao has been nominated to Aquila’s board.

The deal is subject to approval from the Australian Foreign Investment Review Board, Chinese regulators and Aquila’s shareholders.