A Baosteel booth at a Shanghai exhibition. Wu Changqing

The project is likely to begin this year. Baosteel will fund the exploration of the area and the project's feasibility studies. FMG is responsible for providing land and getting approval from the government, Russell Scrimshaw, executive director of FMG, said yesterday.

"The exploration and feasibility studies are expected to take 15 to 20 months. Then the two companies will set up a 50-50 joint venture for technical investment and the entire project," said Scrimshaw. The magnetite produced will be shared between the two.