Fortescue Metals Group appears to be diversifying its iron ore operations, buying a stake in an oil and gas company.
FMG will become a cornerstone investor in the Melbourne-based company, Oil Basins, which operates in WA's Canning Basin.
The investment is worth $4.2 million dollars and represents an 18 per cent stake in the company via a placement of new shares.
Oil Basins says the funds will support the development of its Canning Basin assets.
FMG says its investment is part of its strategy to ensure it has long term access to energy supplies.
The company says it is prudent to consider its long term energy requirements because its current operations use a large amount of diesel.
It is FMG's first investment outside iron ore.