Three Chinese companies, Sinosteel, Baosteel and Chinalco, are vying for a stake in Australia's new iron ore giant, Fortescue Metals Group, as they look for fresh investments in Australian resources.

The three Chinese companies are understood to be looking to acquire the stake from US investment firm Harbinger Capital Partners which is trying to offload part of his 16 per cent stake in the Australian miner.

Reports said several Chinese and European companies have been regularly in contact with Harbinger chief executive Philip Falcone, particularly in recent weeks.

While FMG may welcome Chinese investment, Australian federal regulations on the level of foreign investment may limit any stake sale to the Chinese.
 
Besides the new investment limits, Chinese companies have also been facing delays in obtaining approvals from Australia's Foreign Investment Review Board (FIRB).
 
FMG may also have other options and better alternative proposals from other investors.
 
Sinosteel, which is looking at a large position in the iron ore region of Western Australia, has also made a separate bid for a stake in Murchison Metals.

Australian authorities are exercising caution after Chinalco's acquisition of a nine per cent stake in Rio Tinto, Australia's largest iron ore miner. Chinalco's $14 billion raid on Rio's London shares in February had complicated a hostile offer for Rio by Australia's BHP Billiton Ltd/Plc.

FMG, which will load its first commercial-size iron ore cargo this week, plans to export 55 million tonnes per annum, raising it to 100 million tonnes over time.

China is aware of FMG's further potential, given its dominant landholdings in the most important iron ore region of Australia.

The FMG board will hold a meeting in Beijing in a few weeks, to coincide with the arrival of its first shipment of ore to China.

FMG's major investor Forrest had earlier offered to sell 20 per cent in the company to Chinese steel mills, but the Chinese side, led by the chief executive at China Metallurgical Construction, then demanded 85 per cent.
 
When FMG rejected this, MCC threatened to back out of contracts with Fortescue to finance infrastructure and stop taking iron ore supplies for over 20 years.

Any stake sale to a Chinese group is likely to require permission from the Australian government, which has raised concerns about foreign interest in the mining sector.