Northern Minerals is developing a significant source of heavy rare earths
Chinese shareholders may have sold a portion in violation of the 2024 order
It is feared that Chinese parties may want to take control of the company
(Rewritten and updated) by Melanie Burton and Roushni Nair
Northern Minerals NTU.AX stated on Wednesday that the Australian government had prevented an investor based in Hong Kong from voting or transferring the majority of its stake – an action that follows concerns that Chinese parties were attempting to take control of the rare earth mining company.
The company is developing the heavy rare earths project at Browns Range in Western Australia at a time when Western governments are seeking to make inroads into China’s dominance of the sector.
The saga began in 2023 when Northern Minerals referred certain share purchase activities to the Foreign Investment Review Board (FIRB) for investigation.
This was followed in 2024 by an order from Australian Treasurer Jim Chalmers requiring five Chinese parties to divest shares in the mining company to unrelated persons for national interest reasons.
Chalmers’ provisional order on Wednesday regarding a company called Hong Kong Ying Tak stemmed from his belief that three of the five Chinese parties sold him shares in violation of the 2024 order, Northern Minerals said in a statement, citing FIRB correspondence.
Ying Tak, who has no phone number or email address in the Hong Kong company registry, could not be reached by Reuters for comment.
Under the order, Ying Tak will not be able to vote at the upcoming annual general meeting of Northern Minerals, which is scheduled to be held before June 30, and will not be able to sell 361.5 million shares that were allegedly purchased from the three Chinese parties.
This represents 3.8% of Northern Minerals’ shares. In total, Ying Tak holds 4.79% of the company’s shares, according to LSEG data.
The restrictions will remain in place as long as FIRB continues its investigation, the mining company said.
Ying Tak has reduced its stake. In its October annual report, the mining company held a 7.49% stake in the company.
Sydney analyst Matthew Hope from Ord Minnett stated that it would be in China’s interest to delay the mine’s production and it was unlikely that the Australian government would allow the company to fall into Chinese hands.
“The first step is to prevent them from voting. The second step is to encourage them to sell their shares to unrelated parties. This has already proven difficult,” he said.
Chalmers’ order also follows a framework agreement on critical minerals signed last October with the United States, in which Australia committed to strengthening oversight of asset sales for national security reasons.
The Browns Range project development is expected to cost around 600 million Australian dollars. Northern Minerals is awaiting assessments from Australian government financial agencies to determine the level of funding they can provide, with a final investment decision expected later this year.
Northern Minerals’ shares rose 2% on Wednesday amidst a rebound in rare earth and gold-related stocks.
(1 dollar = 1.4461 Australian dollar)
