Investors connected to China in a Western Australian rare earths firm have yet to follow through on federal Treasurer Jim Chalmers’ recent directive to divest their shares. An industry analyst has described the government’s prolonged three-year battle with shareholders over Northern Minerals as “extraordinary.”
The six investors collectively own approximately 17 percent of Northern Minerals, which is actively developing the Browns Range project located in the eastern Kimberley region of Western Australia. This project is particularly valuable due to its abundance of dysprosium and terbium, which are essential for manufacturing high-performance magnets used in advanced military applications, as well as in electric vehicles and wind energy systems.
In May, Treasurer Chalmers mandated that these investors divest their holdings by July 2, citing concerns over national interests. However, just five days after this deadline, Northern Minerals informed the Australian Securities Exchange (ASX) that the majority of the 1.68 billion shares that were supposed to be sold remained in the hands of these investors.
Ian Satchwell, a senior fellow at the Australian Strategic Policy Institute, noted that the federal government’s ongoing struggle with these China-linked investors is unprecedented in Australia. He remarked, “This is the first time, to my knowledge, that such behavior has been exhibited by investors in any Australian company. It is quite extraordinary, but it is also somewhat understandable, given China’s significant interest in delaying or controlling the production of heavy rare earths, a sector where it holds substantial market dominance.”
Earlier this year, the Treasurer intervened to prevent a China-linked investment fund from increasing its stake in the company and ordered five additional entities tied to China to dispose of 613.6 million shares, or 10.4 percent of Northern Minerals, in order to mitigate national security risks. Some of these firms, such as Indian Ocean, were found to have violated the order by transferring shares to affiliated parties. Consequently, Indian Ocean and its former director faced a lawsuit from the Treasurer and were fined $14 million for breaching Australia’s foreign investment regulations.
Satchwell expressed skepticism about the federal government’s ability to enforce compliance with the latest divestment order. “I am unsure what further steps the Treasurer can take beyond issuing directives and potentially appealing to the courts,” he stated. “However, if these investors are located offshore and their identities are not well known, enforcing compliance becomes quite challenging.”
It has been established that federal agencies have linked the six investors to the Chinese government, concluding that their control over Northern Minerals does not align with the interests of Australia and its allies. A Treasury representative indicated that further actions would be pursued if deemed necessary to safeguard national interests. “We expect foreign entities investing in Australia to adhere to our legal framework,” the spokesperson asserted. “We will take the necessary measures to protect national interests and uphold the integrity of our foreign investment system.”
Northern Minerals has stated it will provide relevant share registry details to the Department of Treasury to aid in assessing compliance with the Treasurer’s divestment orders issued in May. The company refrained from making additional comments on the matter.
