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Australia's government has blocked a
Chinese investor from raising its stake in a rare earths mining company on the
advice of the Foreign Investment Review Board, Treasurer Jim Chalmers said on
Wednesday.
Reuters first reported on Tuesday that
Chalmers had blocked Yuxiao Fund, which is the Singapore-registered private
company of Chinese mining investor Yuxiao Wu, from raising its ownership of
Northern Minerals to 19.9% from 9.92%.
A government register showed Chalmers
signed a prevention order on February 15, and Northern Minerals executive
director Nick Curtis told Reuters the decision was based on "national
interest".
Northern Minerals plans to become the first
significant world producer of dysprosium outside China, which controls 94% of
supply. Dysprosium is a key component for magnets for electric vehicles.
Yuxiao Fund is Northern Minerals largest
shareholder, joining the register 18 months ago. Wu has significant mining
businesses in Mozambique and is the dominant supplier to China for a lower
grade rare earth, Curtis said.
"I made that decision based on the
advice of the Foreign Investment Review Board, and consistent with other
decisions taken by other governments in the past," Chalmers told reporters
on Wednesday.
The board is required to screen foreign
investment for the national interest, and Chalmers flagged in a speech in
November that Australia, the world's top lithium supplier and a major producer
of rare earths, would become more selective about who it lets invest in its
critical minerals industry.
Opposition leader Peter Dutton said his
party supported the decision, and the previous Liberal government had changed
the foreign investment rules to screen for national interest and blocked some
investments based on advice from the board and intelligence agencies.
Australia is the biggest supplier of iron
ore to China, but has said it wants to diversify its partnerships for the
supply and processing of rare earths.
Australia formed a Minerals Security
Partnership in July with the United States and its security allies Japan,
Korea, Canada and the United Kingdom, as well as several European nations.
Australian Strategic Policy Institute
Executive Director Justin Bassi, a national security adviser to the previous
government, said the board's recent decision to approve a Chinese investment in
iron ore, and block the acquisition of a rare earth miner, showed the screening
system was working to "ensure economic drivers do not override national
security and sovereignty priorities".
"Rare earths are key inputs to many
forms of critical technologies, including those central to defence," he
said.
China previously criticised Australia for
blocking Chinese investment on national security grounds, saying this
contributed to a years-long diplomatic freeze. Relations between the two
countries are improving.
Assistant Trade Minister Tim Ayres said on
Wednesday Australia wanted to stabilise the relationship with China but there
are "some difficult structural challenges there".
"The policy of the government has
really not changed in terms of our approach to China, from the last government
to this government," he said.
"I want to see more evidence of
Australian imports being allowed back into China," he added.