More Chinese cash for Fortescue to expand iron ore ops

Australian iron ore miner Fortescue Metals Group (FMG.AX: Quote) will raise an....

Australian iron ore miner Fortescue Metals Group (FMG.AX: Quote) will raise an additional A$86.8 million ($56 million) from China’s Hunan Valin Iron and Steel Group though a share issue, it said on Monday.Last month Valin paid $770 million for 16.5 percent of Fortescue. The new shares will be issued at A$2.48 per share, the same price as the earlier stake sale."The funds raised through the Valin placements provide extra strength to Fortescue’s balance sheet, and offer a strong financial base for Fortescue to expand above its 55 million tonne per annum production capacity," the miner said in a statement.Valin’s stake in Fortescue will rise to 17.4 percent after the sale of the new shares, which is subject to Australian government approval.Fortescue scrapped a plan last month to raise A$500 million in an institutional placement, saying it believed it had raised enough cash.The miner also plans to quadruple iron ore sales to an arm of Valin, giving it an outlet for its swiftly rising iron ore output at a time of weakening demand from the steel sector.China is emerging as a white knight for Australia’s struggling mining companies, culminating last week with an offer by state-owned Chinalco to invest $19.5 billion in Rio Tinto Ltd/Plc (RIO.AX: Quote) (RIO.L: Quote).