(Bloomberg) — Aquila Resources Ltd., seeking to build a A$3.9 billion ($3.8 billion) iron ore project, said Chinese steelmakers are interested in buying a stake in the proposed Australian operation to secure supplies of the raw material.

“There is a lot of interest in off-take, in equity participation,” in the Western Australian project, Tony Poli, chief executive officer of the Perth-based company, said today in a phone interview. Aquila also produces coal in the Bowen Basin in Queensland state.

Chinese companies are snapping up mining assets in Australia to ensure supplies for the world’s fastest-growing major economy. Acquisitions of coal and iron-ore assets in Australia, the world’s largest exporter of the raw materials, will rise as steelmakers try to reduce costs, UBS AG said in a May 21 report.

“We have had no serious approaches,” Poli said by phone from Perth. “The board controls about 50 percent of the company so the best way of looking at it is we will certainly use that shareholding to discourage any unattractive offers. But equally it can be used to encourage offers that fully value our assets.”

Aquila fell 36 cents, or 2.1 percent, to A$16.49 at the 4:10 p.m. Sydney time close on the Australian stock exchange. It has a market value of A$4.1 billion. Poli is the company’s largest shareholder with his 30.5 percent stake worth about A$1.2 billion according to Bloomberg calculations.

Spin Off

Aquila last week said it’s planning to spin off some of its exploration assets in Australia and Africa to create Aquila Exploration Ltd. It will keep its producing asset, the Isaac Plains coal mine in Queensland state, as well as the West Pilbara iron ore project which could produce 25 million metric tons a year starting from 2012.

“We expect there to be further consolidation within the sector as steel producers globally recognize the increasing importance of securing supplies of iron ore, coal and manganese,” UBS analysts led by Sydney-based Glyn Lawcock, said in the report.

Sinosteel Corp., China’s second-largest iron ore trader, has bid A$1.36 billion for Western Australian producer Midwest Corp. Baosteel Group Corp., China’s biggest steelmaker, will increase purchases of iron ore from Fortescue Metals Group Ltd. and may buy shares should the Australian company develop its projects as planned, Baosteel Chairman Xu Lejiang said today in Shanghai.

China Metallurgical Group Corp., a state-owned construction company, got approval today from the Australia Foreign Investment Review Board to buy Cape Lambert Iron Ore Ltd.’s project in Western Australia for A$400 million.

Takeover speculation in the Australian coal sector has been spurred by ArcelorMittal’s purchase last week of a 14.9 percent stake in Macarthur Coal Ltd. for A$631 million. Coal producers Gloucester Coal Ltd. and Felix Resources Ltd. surged to records this month.