Australia's Foreign Investment Review Board (FIRB) on Friday approved the acquisition by China's largest steel maker of up to 19.99 percent of coal miner and iron ore explorer Aquila Resources.
The Australian government has given the green light for the AU$285 million ($260 million) transaction.
The final hurdle to be cleared is approval by Chinese regulators after Aquila shareholders voted in favor of the proposed deal at the company's general meeting in Perth on Wednesday.
"Whilst the proposed issue of shares to Baosteel by the company is for 15 percent of the expanded issued share capital of the company, Baosteel has FIRB approval to acquire up to 19.99 percent, " Aquila said.
The deal is Baosteel's first major international strategic investment in a public company and secures it a long-term supply of raw materials.
"Aquila looks forward to working closely with Baosteel and to fast tracking the company's significant coal, iron ore and manganese projects," Aquila said.
Under the terms of the deal, announced on Aug 28, Baosteel has agreed to assist Aquila in sourcing low cost financing from Chinese institutions to underpin development of its projects.