According to the Financial Times, despite the recent repair in Australia-China relations, the Australian government remains firm in its actions. Treasurer Jim Chalmers, considering national interests and based on the recommendations of the Foreign Investment Review Board (FIRB), has asked the Chinese Yuxiao Fund and its four affiliated companies to reduce their shares in Northern Minerals, a rare earth developer in Western Australia. This decision underscores the political importance of key minerals and aims to protect national interests and foreign investment regulations.
According to the Financial Times, despite the recent repair in Australia-China relations, the Australian government remains firm in its actions. Treasurer Jim Chalmers, considering national interests and based on the recommendations of the Foreign Investment Review Board (FIRB), has asked the Chinese Yuxiao Fund and its four affiliated companies to reduce their shares in Northern Minerals, a rare earth developer in Western Australia. This decision underscores the political importance of key minerals and aims to protect national interests and foreign investment regulations.
After planning to significantly increase its stake in Northern Minerals to nearly 20%, Yuxiao Fund was rejected by Australian authorities early last year. Subsequently, in October of the same year, Northern Minerals reported Yuxiao Fund’s illegal share increase to FIRB. Although registered in Singapore, the fund is actually controlled by Wu Tao, chairman of China’s Jinan Yuxiao Group.
Currently, Yuxiao Fund is forced to reduce its stake to 8%. Four other funds and individuals involved are also required to sell shares acquired after September last year. These include Black Stone Resources from the British Virgin Islands and Indian Ocean International Shipping and Service Company registered in the United Arab Emirates.
These actions coincide with heated discussions in Australia about China’s “core position” in the rare earth industry. Rare earths are crucial materials for manufacturing wind turbines, electric vehicles, and defense equipment.
According to the International Energy Agency, China dominates rare earth mining and processing, controlling 70% of global mining and 90% of the processing industry. Therefore, Australia has listed rare earths as a key mineral strategy, promoting domestic companies to establish supply chains outside China. Currently, Northern Minerals has become an important supplier of rare earth elements to Iluka Resources’ refinery on the Western Australian coast.
According to the Central News Agency, the Canadian government had already requested the sale of Chinese stakes in the key mineral sectors in 2022. This year, two Canadian mining companies canceled investment cooperations with China due to foreign investment regulations. Graphite producer SRG Mining terminated its investment plan with Carbon One New Energy Group in March, and Vancouver copper producer Solaris Resources abandoned its agreement to sell 15% of its shares to Zijin Mining in May.
In response to the above situations, the following steps can be taken:
Comprehensive Compliance Review: Companies should conduct thorough compliance reviews of overseas investments and stay informed about international developments to ensure legality while flexibly responding to political and economic changes.
Diversification Strategy: Overseas mineral investment companies should adopt diversification strategies to reduce dependence on a single region, thereby mitigating risks.
Establishing Long-term Partnerships: For companies with established overseas investments, building long-term, stable partnerships with local governments, communities, and industry partners is crucial. This can be achieved through cooperative R&D, technology exchange, and jointly developing new projects.
By implementing these steps, companies can address challenges in the investment process, thereby protecting and growing their overseas investment value.
