Chinese-linked companies have applied to the Foreign Investment Review Board seeking permission for an investment involving Fortescue Metals Group.
There are no moves to take over Fortescue. Instead, the companies are interested in buying a stake or increasing an existing stake, sources said.
Fortescue and Baosteel already work closely. In June 2012 the two companies merged their magnetite iron ore assets in the Pilbara into a venture called FMG Iron Ore Bridge, which is 88 per cent controlled by the Perth company and 12 per cent owned by the Chinese steel giant.
One source said Fortescue has previously held discussions with CITIC about a potential investment in its rail and port infrastructure.
Fortescue built its business using debt, which has put it under pressure several times when ore prices have weakened.
Fortescue chief executive Nev Power previously said: "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."
Fortescue still faces a massive $US4.9 billion debt repayment in 2019.
It is understood an equity selldown of Fortescue's Pilbara mines has been on the cards.
Rio and BHP have many equity joint ventures at the asset level – BHP and Rio partnered with the Japanese long ago, and later the Chinese.
China is Fortescue's main customer so an equity investor would likely come from there too.