Why Australia is probing China-linked rare earth investors
What's the story
Australia's Economy Minister Jim Chalmers has intensified scrutiny on China-linked investors in a critical minerals project. The move comes after the investors defied orders to sell, putting the mine's access to US funding at risk. Northern Minerals, the company behind the Browns Range mine, had positioned it as a potential "future cornerstone of non-China supply" for heavy rare earths like dysprosium and terbium.
Investor defiance
New conditions imposed on 2 shareholders
A group of China-linked shareholders has defied government orders to sell their stakes in Northern Minerals.
The company announced today that new conditions have been imposed on two of these shareholders - Hong Kong-registered Qogir and Virgin Isles-registered Real International Resources.
These conditions will require the Australian government to vet any share sale they make, ensuring "the acquirer of the interest is not an associate of the foreign person."
US efforts
US seeks alternative critical minerals sources after China export restrictions
The US has ramped up its search for new sources of critical minerals after China, the dominant supplier, restricted exports last year.
Last week, US President Donald Trump announced a $3 billion investment in critical minerals projects, including a conditional $400 million loan from the Pentagon to an Australian rare earth mine in New South Wales.
Northern Minerals has been in talks with US government funding agencies since an October meeting between Trump and Australian Prime Minister Anthony Albanese.
Progress hindered
Shareholder controversy affects US government funding
The shareholder controversy has hampered Northern Minerals's progress in securing US government funding.
In 2023, Australia's foreign investment regulator blocked a Chinese shareholder from increasing its stake in Northern Minerals on national interest grounds.
The following year, the group attempted to remove the miner's management.
Chalmers had ordered six China-linked shareholders controlling 17.5% of the company to sell their stakes by July 2.
New order
Voting rights restricted for China-linked shareholders
Three of the six shareholders failed to comply with the initial order by July 14.
This prompted a new directive barring them from voting on company decisions.
The orders, issued under Australia's foreign investment law, do not specifically mention China, which is a major buyer of Australia's top exports including iron ore, coal, and liquefied natural gas.
Response
Northern Minerals welcomes new scrutiny
Beijing has reacted strongly to any attempts to exclude Chinese investors from Australia's rare earths sector.
Meanwhile, Northern Minerals's Executive Chairman Adam Handley welcomed the new scrutiny today.
The firm had said last month that it viewed the order for shareholders to sell as "an important step in aligning its share register with Australia's national security interests."