Shares in Fortescue Metals Group have surged more than 14 per cent in early trade on Tuesday after The Australian Financial Review revealed the company was in discussions with a number of Chinese groups about a potential investment.
After closing at $2.17 on Monday, FMG traded as high as $2.50 before settling around $2.45 just before 11am AEST, up 13 per cent.
The Financial Review revealed that Australia's third-largest iron ore producer has held discussions with China's largest steel producer, Baosteel, and China's largest conglomerate, CITIC, about a recapitalision to shore up its balance sheet.
It is understood the two companies have applied to the Foreign Investment Review Board seeking permission for an investment involving Fortescue.
A source said Fortescue chairman Andrew Forrest has had informal discussions about selling a stake in the company's mining assets, and potentially selling down part of his equity holding of about 30 per cent.
Fortescue chief executive Nev Power has previously talked about the possibilty of bringing an investor in, saying: "A strategic investor would probably be the most appropriate partner for us, I think. We have discussions all the time with people who are interested in asset sales. For us, it is really important that we see the right partners and on the right terms and values."
Revelations about pending but unnamed applications were reported by veteran journalist Laurie Oakes on the weekend.
A Fortescue spokesman said the company "doesn't comment on market speculation".
