Sydney  - Fortescue Metals Group Ltd said Tuesday that it had received Australian government approval for Chinese steel maker Hunan Valin Iron and Steel to pay 645 million Australian dollars (441 million US dollars) for a 17.5-per-cent stake in the nation's third-largest iron ore miner.

Under what's known as a stand-still agreement, Valin will undertake to hold no more than 17.5 per cent of Fortescue.

Fortescue chief executive Andrew Forrest, who owns 35 per cent of Fortescue, said in August his company would remain Australian controlled.

The deal needed the approval of Treasurer Wayne Swan, who set out conditions for it to go through that have been agreed by Valin and Fortescue.

Canberra has yet to make a decision on investment applications from other companies controlled by the Communist Party of China.

Swan is currently mulling over China Minmetals Corp's revised takeover bid for struggling OZ Minerals Ltd.

Swan last week refused to tick the initial all-cash deal on national security grounds. He judged that because the Prominent Hill copper-gold mine was situated in the Woomera rocket testing zone it would have to be excised from the initial investment application. (dpa)