CRM will invest 61.2 million yuan (US$7.85 million) in the Western Australia-based Yilgarn Infrastructure Ltd and hold a 20 per cent stake in the firm, which was established in July 2005.

"This is not only a good investment for CRM, but also a good project for China because China can secure access to iron ore resources in that region," said Yilgarn Chairman John Saunders.

"By getting involved in the infrastructure building, China can achieve low iron ore transport costs from the mines to the port and will have very competitive iron ore prices," Saunders told China Daily in an telephone interview yesterday.

CRM was unavailable for comment.

Analysts said it is important for China not only to invest in mines as it does through a number of Chinese steel mills and traders, but also in the infrastructure servicing the mines.

China's iron ore imports have increased annually by an average of over 30 per cent over the past five years.

"The infrastructure project in Australia is just a natural next step for China," said Yu Jun, an analyst from CITIC Securities.

Yilgarn will build a deepwater port at Oakajee, approximately 25 kilometres north of Geraldton, Western Australia. It will also construct a rail network to serve all the existing and new iron ore mines in the region from Oakajee/Geraldton to both the Weld Range and Jack Hills areas and the Koolanoooka, Blue Hills and Mount Gibson areas.

The annual throughput capacity in that region is expected to be 60 million tons. Iron ore expansion in that area could potentially position it as second only to Pilbara as Australia's largest iron ore exporter.

As each of the mines is located hundreds of kilometres from the port, the new infrastructure will make it easier to ship iron ore from those remote areas, Saunders said.

Saunders said China National Overseas Engineering Corp and China Harbour Engineering Co Ltd would possibly be involved respectively in building the rail network and the port.

Construction will begin in mid-2008 and is expected to be completed by 2011. Yilgarn plans to list on the Australian Stock Exchange in the middle of next year to attract further investment.

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