SYDNEY : Australia’s Treasurer Jim Chalmers said on Wednesday he had blocked a Chinese investor from lifting its stake in a rare earths mining company on the advice of the nation’s Foreign Investment Review Board.
Reuters first reported on Tuesday that Chalmers had blocked Yuxiao Fund, which is the Singapore-registered private company of Chinese mining investor Yuxiao Wu, from raising its ownership of Northern Minerals to 19.9 per cent from 9.92 per cent.
A government register showed Chalmers signed a prevention order on Feb. 15., and Northern Minerals executive director Nick Curtis told Reuters the decision was based on “national interest”.
Northern Minerals plans to become the first significant world producer of dysprosium outside China, which controls 94 per cent of supply. Dysprosium is a key component for magnets for electric vehicles.
Yuxiao Fund is Northern Minerals largest shareholder, joining the register 18 months ago. Mr Wu has significant mining businesses in Mozambique and is the dominant supplier to China for a lower grade rare earth, Curtis said.
“I made that decision based on the advice of the Foreign Investment Review Board, and consistent with other decisions taken by other governments in the past. Beyond that, I don’t intend to comment,” Chalmers told reporters on Wednesday.
The board is required to screen foreign investment for the national interest, and Chalmers flagged in a speech in November that Australia, 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.
Opposition leader Peter Dutton said the previous Liberal government had changed the foreign investment rules to screen for national interest and had blocked some investments based on advice from the board and intelligence agencies.
“That is the way those decisions should be made and governments do have to make tough decisions, and in our country’s best interests, and we will support the government when they do that,” he told reporters on Wednesday.
Australia is the biggest supplier of iron ore to China, but has said it wants to diversify its partnerships for the supply and processing of rare earths.
Australia formed a Minerals Security Partnership in July with Western allies – the United States, Canada, Finland, France, Germany, Japan, the Republic of Korea, Sweden, the United Kingdom and the European Commission.
Australian Strategic Policy Institute executive director Justin Bassi, who was a national security advisor to the previous government, said the board’s recent decision to approve a Chinese investment in iron ore, and block the acquisition of a rare earth miner, showed the screening system was working to “ensure economic drivers do not override national security and sovereignty priorities”.
“Rare earths are key inputs to many forms of critical technologies, including those central to defence,” he said.
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