The Australian government has blocked a Chinese investor from holding a bigger stake in Northern Minerals, a mining company that produces heavy rare earths.
Northern Minerals said on Tuesday said the federal government blocked its largest shareholder – China’s Yuxiao Fund – from raising its ownership to 19.9% from 9.92% on grounds of national interest.
Yuxiao Fund sought Foreign Investment Review Board approval in August. But a government register showed Treasurer Jim Chalmers signed a prevention order on February 15.
The Singapore-registered fund is an investment vehicle of Chinese national Wu Yuxiao, who also owns mining companies in Mozambique supplying lower-grade rare earths to China, Northern Minerals executive chairman Nick Curtis said.
“There is a special category of assets for any government to protect its national interest,” Mr Curtis said.
Dysprosium mining plant in WA
Northern Minerals has a project in Browns Range, southeast of Hall’s Creek town, in the Tanami region in northwest Australia. The firm says on its website it is the the first significant producer of dysprosium outside of China.
The Yuxiao Fund could not be reached for comment. The Australian Treasurer’s office, which would be responsible for blocking such an investment based on the advice of the review board, also declined to comment.
China has criticised Australia for previously blocking Chinese investment on national security grounds, saying this contributed to a years-long diplomatic freeze.
Relations between the two countries are improving after years of strained ties, although Chinese “trade blockages” on Australian exports remain in place.
In November, Mr Chalmers said Australia, which is the world’s top lithium supplier and a major producer of rare earths, would become more selective about who it lets invest in its critical minerals industry.
Rare earths ‘wanted to make batteries in Australia’
When asked about Chinese investment in the sector, Prime Minister Anthony Albanese said last week his government would consider the merits of any deal, but favoured using rare earths and other critical minerals to make batteries in Australia.
Curtis said Mr Wu invested in Northern Minerals for financial reasons, not to supply China, and voted in favour of an exclusive supply deal with Australia’s Iluka Resources last year.
Northern Minerals said it planned to become the first significant world producer of dysprosium outside China, which controls 94% of supply. Dysprosium is a key component for magnets for electric vehicles.
“Our material is needed for the magnet supply chain,” said Mr Curtis, adding this was the likely reason the increased investment by a Chinese investor was blocked.
Northern Minerals second-largest shareholder is also Chinese, although Chinese citizens or high net-worth Australian citizens of Chinese background hold less than 30% of shares, he said.
The vice-president of the Australia China Business Council, Mr Adam Handley, became a director in December.
- Reuters with addtional editing by Jim Pollard