A Chinese firm's billion-dollar takeover of an Australian iron ore miner was in danger of collapse Tuesday after reports the buyer's boss was detained by police for harbouring his brother, a murder suspect.

Australia's Sundance Resources said in a statement on its website that Hanlong Group, a privately-owned company based in Sichuan province in southwest China, had missed a deadline to provide information on how it will finance the deal.

Sundance gave no reason why its Chinese suitor missed the time limit.

But Chinese media said last week that Hanlong's chairman Liu Han was being held by police on suspicion of harbouring his brother, who has been arrested for murder.

The website of the Economic Daily newspaper also quoted sources as saying Liu was suspected of laundering money through casinos in Macau, the former Portuguese colony now administered by China where gambling is legal.

Hanlong could not be reached for comment on Tuesday.

A listed unit of Hanlong, Jinlu, said last Thursday that it had lost contact with Liu but did not confirm the chairman had been detained by police.

Sundance Resources said in August last year it had accepted a revised takeover offer from Hanlong and valued the deal at about Aus$1.4 billion (US$1.45 billion) at the time.

The potential acquisition would give Hanlong control of Sundance's Mbalam iron ore mine, which straddles the border between Cameroon and the Republic of Congo in west Africa.

The Chinese government has encouraged companies to go abroad to build themselves into international players and secure supplies of energy and raw materials to keep the economy humming.

The two companies had until April 3 for "consultation" over the takeover agreement, after which either side could terminate it, Sundance said in the statement.

Hanlong is a diversified company with interests ranging from tourism to minerals and assets of more than 20 billion yuan ($3.2 billion), according to its website.