Australia Orders Chinese Investors to Divest Shares in Rare Earth Mining Firm

The Australian government has mandated Chinese investors to divest their stakes in Northern Minerals, a strategic rare earth mining company, to curb China's growing influence in the industry. The decision, announced by Treasurer Jim Chalmers, follows an investigation by the Foreign Investment Review Board (FIRB) that found the acquisitions contrary to national interest.

This move has significant implications for the global rare earths market and the geopolitical dynamics. It could lead to a shift in the balance of power in the industry and have consequences for trade relationships between Australia, China, and other Western nations.

The main investor affected is Yuxiao Fund, a Singapore-registered private investment vehicle controlled by Chinese national Wu Tao. Yuxiao Fund, along with four associates, holds approximately 10.4% of Northern Minerals' issued capital, amounting to 613,573,632 shares. These investors have been given 60 days to divest their holdings.

The divestment order also includes other foreign shareholders such as Ximei Liu, Xi Wang, and Black Stone Resources. This move is part of a broader effort by Australia and its Western allies to limit Chinese investment in critical minerals and reduce dependency on China, which currently dominates the global rare earths market.

Northern Minerals is developing the Browns Range heavy rare earths project in Western Australia, a site considered vital for its deposits of dysprosium, a rare element used in magnets for wind turbines and electric vehicles. The company has a supply agreement with Iluka Resources, which holds a 19.9% stake in Northern Minerals and is constructing the Eneabba rare earths refinery near Perth.

The Australian government has already committed $1.25 billion to assist Iluka in financing the refinery, underscoring its strategic importance. Chalmers emphasized that the decision to force divestment is designed to protect national interest and ensure compliance with Australia's foreign investment framework.

This is the first divestment notice issued by Chalmers in over two years. He stated, "The decision, based on advice from the Foreign Investment Review Board, is designed to protect our national interest and ensure compliance with our foreign investment framework."

The order comes after Northern Minerals' former CEO, Nick Curtis, raised concerns about share trading and requested an investigation by the FIRB last year. Curtis recently stepped down from the company's board, transitioning to a strategic adviser role.

The divestment order is part of a larger strategy by Western nations to diversify their sources of critical minerals, vital for high-tech industries and defense applications. Australia's move to protect its rare earth resources highlights the growing geopolitical tensions surrounding these vital materials.

Key Takeaways

• Australia orders Chinese investors to divest stakes in Northern Minerals, a rare earth mining company.
• Decision aims to curb China's growing influence in the industry and protect national interest.
• Yuxiao Fund and associates must divest 10.4% stake (613,573,632 shares) within 60 days.
• Move part of broader effort by Australia and Western allies to limit Chinese investment in critical minerals.
• Decision highlights growing geopolitical tensions surrounding rare earth resources.