Australia orders Chinese investors to sell stakes in rare earths firm over national security

[SYDNEY] Australia’s government has ordered the biggest shareholders in rare earths firm Northern Minerals to sell their stakes, the second such intervention in two years as Canberra seeks to protect the company from China-linked investors on national security grounds.

Six shareholders in the A$229 million (S$209 million) firm must sell their stakes within two weeks from Monday (May 18), according to a statement from the Treasury. Five of them are registered in China or Hong Kong, according to the statement, and one in the British Virgin Islands.

Four of the entities are the largest holders, according to data compiled by Bloomberg, including top investor Vastness Investment with around 7 per cent. Altogether, the six entities hold almost 27 per cent of the outstanding float, the data show. Shares in the company fell more than 8 per cent in morning trade before paring some of the loss.

The order follows a similar move in 2024, when the government instructed five investors to sell their stakes in Northern Minerals. Canberra eventually sued a Chinese company for breaching that directive, winning the court case last year. However, last month the Treasury said it was concerned some of the parties had breached the order.

The Perth-headquartered miner in a statement on Monday said it was considering the latest orders from the Treasury and would update the market at a later time.

Western nations including Australia and the US have attempted to limit Chinese investment in so-called critical minerals and metals key for defence industries and the energy transition. Beijing has a near-monopoly on rare earth production and processing, and has leveraged export controls during trade disputes with the Trump administration since last year.

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Northern Minerals’ Browns Range project is yet to be developed but is a sizable deposit of so-called heavy rare earth elements, which are used in military applications and advanced electronics. The asset sits in the Pilbara region of Western Australia and has received non-binding letters of support from the US and Australian governments for future development. BLOOMBERG