The pair will complete a "12-month rapid project assessment" and if viable, FMG can choose to acquire 50% of the Midwest project and up to 100% of the Oakajee infrastructure project.

"For over three decades, Sinosteel has demonstrated their strong performance and ability to deliver mining projects in Australia including their Channar mine in the Pilbara," FMG CEO Elizabeth Gaines said.

"The signing of this MoU demonstrates Fortescue's commitment to our strategic pillars of investing in the long-term sustainability of our iron ore business, expanding into new regions and continuing to deliver strong returns to our stakeholders.

"We look forward to working with Sinosteel on the next steps for this important project for Western Australia which, in addition to the magnetite and infrastructure development, offers the opportunity for a co-ordinated project combining Fortescue's iron ore and infrastructure pedigree with Fortescue Future Industries' green energy objectives.

"Future development including a renewable, green hydrogen hub in the Mid West region at Oakajee would deliver a large-scale resources and renewables project for Western Australia, further underpinning our enduring relationship with China."

Sinosteel president Andong Liu said it was the company's vision to develop a world-class magnetite project in the Mid West.

"This world-class project is reflected not only in the scale of resources, ore processing characteristics and product quality, but also in the huge renewable energy potential. Today, we are pleased to welcome our new partner in this visionary path, Fortescue," he said.

"Fortescue is not only a leading iron ore producer, but also a pioneer in green energy initiatives.

"In this cherished land of the Mid West, we are confident that together with Fortescue we will make the Mid West a low-carbon, green, high-quality iron ore centre and lead a new era of magnetite development in the Mid West."