Australia ups scrutiny of China-linked rare earth investors

SYDNEY: Australia's economy minister increased scrutiny on Monday of China-linked investors in a critical minerals project that are refusing orders to sell, jeopardising the mine's access to US funding.

Northern Minerals has pitched its Browns Range mine as a "future cornerstone of non-China supply" of heavy rare earths dysprosium and terbium, both essential to defence and digital technologies.

But a group of China-linked shareholders have defied government orders to sell.

The company on Monday said new conditions imposed on two of those shareholders -- Hong Kong-registered Qogir and Virgin Isles-registered Real International Resources — will require the Australian government to vet any share sale they make to ensure "the acquirer of the interest is not an associate of the foreign person".

The US has accelerated efforts to find new sources of the critical minerals after dominant supplier China restricted exports of them last year.

US President Donald Trump announced last week $3 billion in US investment in critical minerals projects, including a US$400 million conditional loan from the Pentagon to an Australian rare earth mine in New South Wales.

Northern Minerals, also in talks with US government funding agencies since an October meeting between Trump and Australia's Prime Minister Anthony Albanese, has had its progress frustrated by the shareholder controversy.

In 2023, Australia's foreign investment regulator blocked a Chinese shareholder from doubling its stake in Northern Minerals on national interest grounds.

The following year, the group sought to oust the miner's management.

Economy minister Jim Chalmers in May ordered six Northern Minerals shareholders with links to China and controlling 17.5% of the company to sell their stakes by July 2.

Three had not complied by July 14, prompting a new order preventing them from voting on company decisions.

The orders under Australia's foreign investment law do not refer explicitly to China, which is a major buyer of Australia's biggest exports of iron ore, coal and liquefied natural gas.

Beijing bristles at any move to exclude Chinese investors from Australia's rare earths sector.

Northern Minerals' executive chairman Adam Handley welcomed the new scrutiny on Monday.

And the firm said last month it considered the order for the shareholders to sell "an important step in aligning its share register with Australia's national security interests".

By RSS/AFP