Chinese steelmaker Baosteel and Australian rail operator Aurizon have moved a step closer to sealing their $1.42 billion takeover of Aqulia Resources.
The Foreign Investment Review Board (FIRB) approved the deal on Thursday.
The offer still needs approval from Aquila's shareholders before it can go ahead.
Aurizon boss Lance Hockridge and Baosteel's chairman Zhihao Dai welcomed the FIRB's decision.
Aquila said shareholders should take no action until the company's independent board sub-committee comes up with a formal recommendation on the offer.
The Chinese steelmaker Baosteel and Aurizon plan to kickstart the stalled $10 billion West Pilbara Iron Ore Project if they succeed in their joint takeover bid.
Aquila Resources holds a 50 per cent stake in the project.
Analysts have said the deal is attractive for Aquila shareholders, but major hurdles remain for the completion of such a large-scale mine, rail and port project.
Aquila shares closed one cent higher at $3.52 while Aurizon was flat at $4.94.
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