China-linked investors defy Australian order to sell rare earths shares

China-linked investors are defying a federal government order to sell their shares in Northern Minerals, an Australian company developing a heavy rare earths project crucial for defense and green technologies. This defiance is considered "extraordinary" by a critical minerals policy expert.

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This is the first time, to my knowledge, that such behaviour has been exhibited by investors in any Australian company

The six individuals and companies involved hold approximately 17% of Northern Minerals, which owns the Browns Range project in Western Australia. This project is rich in dysprosium and terbium, vital minerals for high-performance magnets used in advanced military hardware, electric vehicles, and wind turbines.

Federal Treasurer Jim Chalmers issued divestment orders by July 2, citing national interest grounds. However, five days after the deadline, Northern Minerals informed the ASX that the subjects of the orders still held a majority of the shares they were instructed to sell. This marks the first time, to the knowledge of Australian Strategic Policy Institute senior fellow Ian Satchwell, that investors have exhibited such behavior in an Australian company.

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It is quite extraordinary, but it is also understandable to an extent, given the stake that China has in seeking to delay or control the production of heavy rare earths because it is so dominant in the global market, and heavy rare earths are a clear strategic product.

Satchwell noted that while the behavior is extraordinary, it's understandable given China's interest in controlling the production of heavy rare earths, a market it dominates. He also highlighted the difficulty the federal government faces in enforcing the order, suggesting that legal action might be the only recourse if offshore investors remain uncooperative.

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I don't know what else the treasurer can do other than issue orders and then appealing to the court to enforce those orders