Factbox - China's investment in Australian magnetite sector

(Reuters) - Australia's magnetite iron ore mining sector, accounting for only about 1 percent of the nation's total production, is growing with the help of foreign investment, mostly from Chinese steelmakers aiming to reduce their reliance on industry giants Rio Tinto (RIO.AX) (RIO.L) and BHP Billiton (BHP.AX) (BLT.L), which mine hematite ores.

Baosteel Iron & Steel Co 600019.S, Anshan Iron & Steel Group (Ansteel) (0347.HK), Sinosteel, Citic Pacific Mining (0267.HK) and others are backing magnetite projects that promise to deliver 25 million tonnes over the next two years from just 3.3 million now.

Here are some facts about Australia's magnetite mining sector.

HEMATITE VERSUS MAGNETITE

* Hematite is often referred to as "direct shipping ore" or "DSO" because it is mined and beneficiated via a simple crushing and screening process before export for use as feed in steel mills.

* Magnetite ore has lower iron content -- around 36 percent versus 61 percent for hematite -- and must be upgraded, typically into pellet form, at an added cost of around $15 per tonne, to make it suitable for steel making.

CHINESE INVESTORS

* Wuhan Iron & Steel is set to spend a further $160 million (104.7 million pound) on top of $102 million already invested to fund the development of new magnetite mines in southern Australia's Eyre Peninsula owned by Centrex Metals (CXM.AX).

* Grange Resources (GRR.AX) is discussing debt financing with its 47.1 percent owner Shagang Steel of China to develop its $1.6 billion Southdown magnetite mine.

* Citic Pacific is targeting a late 2010 start to its 27 million-tonnes-per-year Sino mine project.

* Fortescue Metals Group (FMG.AX), 17.4 percent owned by China's Hunan Valin Iron and Steel, and Atlas Iron (AGO.AX) are in talks with Chinese parties to sell or co-develop magnetite deposits.

* Sinosteel Midwest may develop its Weld Range magnetite project to yield 15 million tonnes per year starting in 2013.

* Weld Range has the potential to become a strategically important stand-alone iron ore development and underpin the third party infrastructure required to support other projects.

MAGNETITE ALLIANCE

* Sinosteel is part of the Geraldton Iron Ore Alliance, a group of five magnetite miners who have agreed to cooperate in developing iron ore projects in the mid-west region, including common-user infrastructure such as rail and ports.

* The alliance estimates about $17 billion worth of capital must be raised in the next four years, with $5 billion of that earmarked for rail lines and ports.

(Reporting by James Regan; Editing by Clarence Fernandez)