Australian rare earths producer Northern Minerals (ASX: NTU) said on Tuesday that the federal government had prevented its largest shareholder, China’s Yuxiao Fund, from raising its stake in the company on grounds of national interest.
Yuxiao Fund needed the Foreign Investment Review Board’s (FIRB) approval to increase its holding in Northern Minerals to 19.9% from 9.92%.
Beijing has condemned Australia for previously blocking Chinese investment on national security grounds, saying those moves have contributed to a years-long diplomatic freeze.
A report by consultant at KPMG and The University of Sydney released last year, showed that Chinese investment in Australia has been steadily decreasing, falling almost 70% in 2021 to the lowest level since 2007.
The Labor government, in power since May last year, has moved to repair diplomatic relations with China after clashes in recent years over trade, influence in the South Pacific, and the origins of the covid-19 pandemic.
Chinese companies, including state-owned steelmaker Sinosteel, say they have yet to see the results of efforts to mend ties placed by the new administration.
According to Sinosteel Australia managing director, David Sun, the FIRB, which has the power to block foreign investment, has been disproportionately rejecting Chinese investors.
“When FIRB rejects one case, they scare many cases,” Sun said in a November presentation at a conference in Sydney.
Northern Minerals has been focused on fine-tuning its heavy rare earths processing system through a pilot plant, which could make the Western Australia-based miner one world’s first significant heavy rare earth producer outside of China.
Northern Minerals says China’s mining and processing techniques only generate grades of 20 to 40 ppm of dysprosium.
The company’s board recently approved a strategic partnership with Iluka Resources Limited to provide it access to feedstock rich in heavy rare earths materials dysprosium and terbium.
The company’s flagship project, Browns Range, is slated to become Australia’s only heavy rare earth mine and the first relevant dysprosium producer outside of China.
The operation, which is expected to have a productive life of 11 years, can yield ore with heavy rare earths grade of between 600 and 800 parts per million dysprosium.
Browns Range consists of seven deposits, with a total mineral resource of 10.8 million tonnes.
(With files from Reuters and Bloomberg)