SYDNEY/HONG KONG - China cheered Australian investors with its undimmed appetite for resources assets as one state-owned firm, Minmetals, clinched a $1.4 billion deal and another, Chinalco, vowed to bounce back from the shock of its failed $19.5 billion Rio Tinto tie-up.

The OZ Minerals deal should re-energise Beijing's go abroad policy, badly bruised last week when Anglo-Australian miner Rio Tinto (RIO.AX) (RIO.L) walked away from Chinalco, China's state metals conglomerate.

Chinalco President Xiong Weiping said in Beijing his company was very disappointed at the collapse of the Rio deal, but did not blame Australia's investment rules for the failure.

Chinalco has also felt the open and welcoming attitude from the Australian government toward foreign investment, including from China, Xiong said.

Chinalco vice president Lu Youqing later told Reuters that the firm would keep looking for Australian opportunities, but the focus of investment would be on metals at the core of the firm's strategy, which do not include iron ore.

China needs to secure supplies of raw materials to feed its growing economy and the Commerce Ministry said the go abroad strategy would continue undimmed.

Opportunities to invest in high-quality enterprises and assets have increased, investment costs have declined and transaction conditions have improved, it said in a statement.

Industry experts and analysts have been concerned that Rio's decision to dump Chinalco at the altar and opt instead for a big rights issue and an iron ore venture with BHP Billiton (BHP.AX) (BLT.L) would dampen China's interest in overseas expansion at a time when many Western mining firms face big debt repayments.

Under a sweetened deal, Minmetals will gain access to OZ Minerals' assets including the Sepon copper and gold mine in Laos and the Century and Rosebery zinc mines in Australia and will run them via a new Australian company, Minerals and Mining Group Ltd (MMG).

OZ Minerals nearly collapsed after last year's crash in commodity prices, and was left at the mercy of lenders who set an end-June deadline to pay its $880 million bank debt.

This is a win-win deal, Minmetals Chairman Zhou Zhongshu said in a statement.

Feng Guiquan, a senior vice president at Minmetals, told Reuters in Taipei the company was looking for acquisition targets in Mauritania, and maybe more deals in Australia.

Given where OZ Minerals was six months ago, this is a damn good outcome, said Rob Patterson, managing director of Argo Investments Ltd, which owns OZ Minerals shares.

FORTESCUE SOARS

As one Chinese deal was approved, investors moved on to scout for potential new targets, driving up shares in Fortescue Metals Group (FMG.AX), the world's fourth-largest iron miner, by more than a fifth to an eight-month high.

Analysts have said China may slow its pursuit of mega-deals with global resources leaders as it licks its Chinalco wounds, and is more likely to keep a lower profile and stitch strategic deals in Africa, Latin America and Canada.

Shares in other iron ore firms jumped too, with Prospector Iron Ore Holdings (IOH.AX) up 23 percent, Brockman Resources (BRM.AX) up 12 percent and Gindalbie Metals (GBG.AX) 11 percent.

It's all to do with the BHP/Rio deal, said Chris Kimbers, a client adviser with Bell Potter Securities.

Everybody's waiting now the Chinese have missed out. They still need to have their iron ore supply. It's likely they will come back and do another deal with Fortescue.

China's Hunan Valin Iron and Steel already owns about 18 percent of Fortescue, and traders said the Chinese group may seek to raise its stake.

Fortescue, founded by entrepreneur Andrew Twiggy Forrest, is a distant No. 4 in iron ore mining behind Brazil's Vale (VALE5.SA), Rio and BHP, and its first year of output is likely to be only 30 million tonnes, one-tenth of Vale's, but its holdings in Australia's Pilbara iron belt give it the potential to more than quadruple output in coming years.

Also, unlike its larger rivals, Fortescue sells all its ore to Chinese mills, giving it a foot in the door with potential investors with access to sizeable state coffers.

China imported 53.5 million tonnes of iron ore last month, just below April's record 57 million tonnes, but is talking tough in current pricing negotiations, threatening to reduce its steel output if Rio and BHP don't cut iron ore prices by 40-45 percent.

Other Asia steel mills have already agreed a 33 percent cut.

(Additional reporting by Coco Li, Michael Wei, Tom Miles and Ben Blanchard in BEIJING, Jacqueline Wong and Alfred Cang in SHANGHAI, Miyoung Kim in SEOUL, Lee Chyen Yee and Lin Miao-jung in TAIPEI and James Regan in SYDNEY; Writing by Ian Geoghegan; Editing by Mathew Veedon and David Cowell)

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