Sinosteel, a steel commodities trader, already owns 19.9 percent of Midwest and is a joint venture partner in Midwest's Mt Weld prospect, one of the Australian firm's five projects. Sinosteel is offering around A$954 million for the remaining shares, based on shares on issue.
It said it has already received Australian Foreign Investment Review Board approval for the bid.
China, with its bustling economy, has emerged as the world's top steelmaker with a growing appetite for imported ore to feed its mills.
"Iron ore prices are rising fast and it's in the best interest of Chinese companies to get into companies like Midwest as soon as possible," Wilson said.
The offer hinges on a minimum 50.1 percent acceptance and Sinosteel receiving Chinese regulatory approvals.
The bid comes after Midwest last month rejected a previous attempt by Sinosteel to win the company's support for an agreed bid, also at an indicative price of A$5.60 each.
A plan for a merger between Midwest and Murchison Metals also collapsed last month after Murchison failed to win over Midwest's board.
Sinosteel's President Tianwen Huang said in a statement the offer would be highly attractive to Midwest shareholders.
"We have made this offer directly to Midwest shareholders as we firmly believe it provides Midwest shareholders with the opportunity to realise certain value in cash for their shares at a significant premium to historical trading levels," he said.
JP Morgan is advising Sinosteel, while EXIM Bank of China has committed to provide funding for the deal.
Sinosteel, which is a Chinese government enterprise, also owns a 40 percent interest in the Channar iron ore mine in Western Australia.
Midwest is among a handful of prospectors seeking to develop mines in far western Australia's midwest region, where much of the ore was deemed uneconomical to mine until ore prices started soaring on Asia demand.
