China-linked investors defy Australia rare earths divestment order

Six China-linked investors have ignored a federal order to sell their shares in Northern Minerals, a Perth-based company that controls one of Australia's most strategic heavy rare earths deposits. The deadline passed July 2. Five days later, Northern Minerals told the ASX the investors still held a majority of the 1.68 billion shares the treasurer ordered them to divest.

Ian Satchwell, a critical minerals policy expert at the Australian Strategic Policy Institute, called the standoff "extraordinary". It is the first time the federal government has faced an open challenge to a national-interest divestment order, he said.

The dispute centers on Browns Range, a deposit in Western Australia's east Kimberley rich in dysprosium and terbium. Those elements go into high-performance magnets used in fighter jets, missiles, electric vehicles and wind turbines. China dominates global heavy rare earths supply, giving Beijing leverage over the supply chains that feed Western defence and clean-energy industries.

Treasurer Jim Chalmers first blocked a China-linked investment fund from increasing its stake in Northern Minerals in 2023. He later ordered five additional entities to sell 613.6 million shares, citing national security risks. Some of those entities, including Indian Ocean, defied the order by selling to a related party instead. The treasurer sued Indian Ocean and a former director, winning a $14 million fine for breaching foreign investment laws.