Australia has quietly blocked a bid by a Chinese-linked company to increase its ownership in rare earths supplier Northern Minerals Ltd., one of the first tests of warmer diplomatic ties between Canberra and Beijing.
(Bloomberg) — Australia has quietly blocked a bid by a Chinese-linked company to increase its ownership in rare earths supplier Northern Minerals Ltd., one of the first tests of warmer diplomatic ties between Canberra and Beijing.
The Singapore-based Yuxiao Fund applied in August 2022 to increase its ownership of Northern Minerals to 19.9%, almost doubling its stake. Northern Minerals executive chairman Nick Curtis told Bloomberg the fund was owned by Wu Yuxiao, a Chinese national who invests in commodities internationally.
But an order prohibiting the move was officially issued by Australian Treasurer Jim Chalmers on Feb. 15, based on advice from the Foreign Review Investment Board. The move was “consistent with other decisions taken by other governments in the past,” Chalmers said in Canberra on Wednesday, without giving further details.
The bid rejection was first reported by Reuters. Bloomberg was unable to find a phone number or email to contact Yuxiao Fund.
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Relations between China and Australia have improved following the election of the center-left Labor government in May 2022. Ministerial meetings between the two countries have resumed and some Chinese trade sanctions against Australian exports have been removed.
Meanwhile, Western nations including Australia are pushing to reduce China’s role in supply chains for rare earths and other so-called critical minerals. In November, Chalmers announced a Treasury review of foreign investment in the sector.
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“We’ll need to be more assertive about encouraging investment that clearly aligns with our national interest in the longer term,” Chalmers said at the time.
Beijing has made it clear they would like to see further relaxation of foreign investment restrictions in Australia. In early January, China’s Tianqi Lithium Corp. agreed to purchase an Australian lithium explorer, a deal which will also need government approval to go ahead.
Later in January, Chinese Ambassador Xiao Qian specifically mentioned the battery material lithium as one possible area of investment during a press conference in Canberra.
–With assistance from Winnie Zhu.
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