Australia’s occasionally irritable relations with China are being tested by an order from the Australian Government that a Chinese-linked investment fund must sell part of its stake in a rare earth company.
The Australian Treasurer, Jim Chalmers, said the Yuxio Fund and four associates must sell 530 million shares in Northern Mining which is trying to develop the Browns Range rare earths deposit in Western Australia.
Australian Treasurer Jim Chalmers has orderd a Chinese-linked fund to reduce its stake in a rare … [+]
Chalmers said he was acting on the advice of Australia’s Foreign Investment Review Board (FIRB) with the compulsory sales order “designed to protect Australia’s national interest”.
Without detailing why Yuxio and its associates have failed to clear the hurdles erected by FIRB the decision indicates that the fund is an unacceptable major shareholder in a sensitive critical metals project.
Rare earths have become a flashpoint in the trade relationship between China and the western world because of China’s dominance and the importance of the elements which make up the rare earths family in emerging technologies, especially those with military applications.
Critical Metals
Metals such as neodymium and praseodymium are important in the manufacture of permanent magnets while other rare earths are used in the guidance systems of rockets.
Australia, through the Weld Range mine of Lynas Rare Earths has been developing a close working relationship with the U.S. Its former chairman, Nic Curtis, was a short-lived chairman at Northern Mining until standing aside last month.
Yuxio, which is registered in Singapore, had been trying to have Curtis removed from the Northern Minerals board with the internal dispute coming to a head at the company’s annual meeting on Thursday.
The latest intervention of FIRB at Northern Minerals follows an order early last year in which the Chinese fund was told it could not lift its stake from 9.8% to 19.9%.
The new order is for Yuxio to reduce its holding in Northern Minerals to 8.5% and for two related companies to sell their shares, which represent another 9% of Northern Minerals.
The related companies are reported by Australian media to be Black Stone Resources registered in the British Virgin Islands and Indian Ocean International Shipping and Service Company registered in the United Arab Emirates.
