FORTESCUE Metals Group's biggest shareholder after chairman Andrew Forrest, China's Hunan Valin Iron and Steel, has flagged the sale of some of its stake in the Perth iron ore miner, according to a Chinese newspaper.

China's 21st Century Business Herald has published a scathing report on Fortescue, citing unnamed Valin sources as saying Fortescue was providing less ore than it was contracted to and "people familiar with the situation" as saying Fortescue's iron ore did not meet the requirements of Valin's blast furnaces.

"The management of Valin is considering choosing a proper time to sell some of Fortescue's shares it holds," the report said, according to a translation provided to The Weekend Australian.

Valin holds 15.2 per cent of Fortescue following the sale of $206 million worth of shares on-market in July. It gained its stake through the purchase of new shares and those of hedge fund Harbinger Capital during the depths of the global financial crisis in 2009.

 Mr Forrest has a 31.6 per cent stake in the company.

The report in what is said to be a reputable state-owned publication raises questions over Valin's desire to stay in Fortescue.

The Weekend Australian understands Valin chairman Li Xiaowei, who is a Fortescue director and who led the move into the miner, was on his way to Fortescue's November board meeting before being called back to China for unknown reasons.

According to an October 27 Bloomberg News report citing a statement on Valin's website, Mr Li had stepped down as chairman because of his age. Australian company filings show Mr Li is 59.

The 21st Century Business Herald and Valin's website both said Mr Li remained chairman.

The report claimed Fortescue had agreed to provide Valin with 10 million tonnes of ore a year but that the company had managed to provide only two million tonnes a year.

Yesterday, Fortescue would not comment on the accusation it was not fulfilling contracts but rejected any questions about the quality of its ore.

"The high quality of Fortescue's ore has been proven many times over," a Fortescue spokeswoman said.

"Fortescue's ore has a high level of acceptance among all of China's major steel mills with many using a large proportion of Fortescue iron ore in their blends -- averaging between 20 and 40 per cent."