China-linked investors' refusal to divest from WA heavy rare earths company 'extraordinary', expert says
In a rare and unprecedented move, China-linked investors are defying federal government orders to sell their shares in a Perth-based heavy rare earths company, sparking concerns about national security and strategic interests. This situation highlights the complex dynamics between foreign investments and critical industries in Australia.
A Strategic Product
The issue revolves around Northern Minerals, a company developing the Browns Range project in Western Australia's east Kimberley region. This project is rich in dysprosium and terbium, critical minerals essential for high-performance magnets used in advanced military hardware, electric vehicles, and wind turbines. China's dominance in the global market for heavy rare earths makes the situation even more intriguing.
Ian Satchwell, a senior fellow at the Australian Strategic Policy Institute, describes the investors' behavior as "extraordinary." He explains, "It is quite extraordinary, but it is also understandable to an extent, given the stake that China has in seeking to delay or control the production of heavy rare earths because it is so dominant in the global market, and heavy rare earths are a clear strategic product."
A Three-Year Battle
The federal government has been engaged in a three-year struggle with these China-linked investors over Northern Minerals. In 2023, Treasurer Jim Chalmers blocked a China-linked investment fund from increasing its stake, and later ordered five additional China-linked entities to sell a significant portion of their shares, citing national security concerns. Despite these mandates, the investors have yet to comply.
Satchwell acknowledges the difficulty in enforcing these orders, especially when dealing with offshore investors whose identities and locations are unclear. He suggests that the government's options are limited to issuing orders and seeking court enforcement, which may not be sufficient to ensure compliance.
Protecting National Interests
The Treasury spokesperson emphasizes the government's commitment to protecting national interests and the integrity of the foreign investment framework. They assert that foreign companies investing in Australia must adhere to the country's laws and that necessary actions will be taken to safeguard the nation's interests.
Northern Minerals has pledged to provide share registry information to the Department of Treasury to assist in the compliance process. However, the company has declined to comment further, leaving the public with questions about the investors' intentions and the potential implications for Australia's critical industries.
