Northern Minerals says Australia blocks Hong Kong investor from voting, selling most of stake

Northern Minerals said on Wednesday the Australian government had blocked a Hong Kong-based investor from voting or transferring the majority of its stake – an action that follows concerns that Chinese parties had tried to take control of the rare earths miner.

The company is developing the Browns Range heavy rare earths project in Western Australia at a time when Western governments are seeking to make inroads into China’s stranglehold over the sector.

The saga began in 2023 when Northern Minerals referred certain share-buying activity to the Foreign Investment Review Board (FIRB) for investigation.

That was followed by a 2024 order from Australian Treasurer Jim Chalmers requiring five Chinese parties to dispose of shares in the miner to non-related people on national interest grounds.

The interim order from Chalmers on Wednesday affecting a company called Hong Kong Ying Tak stems from Chalmers’ belief that three of the five Chinese parties had sold shares to it in breach of the 2024 order, Northern Minerals said in a statement, citing correspondence from the FIRB.

Reuters was not able to reach Ying Tak, which has no phone number or email listed on Hong Kong’s companies registry, for comment.

Under the order, Ying Tak will be restricted from voting at Northern Minerals’ next annual general meeting, which is due to be held before June 30, and cannot sell 361.5 million shares that are believed to have been bought from the three Chinese parties.

That is equivalent to 3.8% of Northern Minerals stock. In total, Ying Tak holds 4.79% of Northern Minerals shares, according to LSEG data.

The restrictions will remain while the FIRB continues its investigation, the miner said.

Ying Tak has been selling down its stake. As recently as the miner’s annual report in October, it held 7.49% of the company.

Analyst Matthew Hope of Ord Minnett in Sydney said that it would be favourable for China if production at the mine was delayed and the Australian government was unlikely to allow the company to fall into Chinese hands.

“The first step is to prevent them from voting. The second thing is to get them to divest to non-related parties. This has already proven to be difficult,” he said.

Chalmers’ order also follows a critical minerals framework agreement with the US signed last October, in which Australia pledged to strengthen oversight of assets sales on national security grounds.

The Browns Range project is expected to cost about A$600 million to develop. Northern Minerals is awaiting assessments by Australian government finance agencies to determine what level of funding they can offer, with a final investment decision expected this year.

Shares in Northern Minerals were up 2% on Wednesday amid a rally among rare earths and gold stocks.

($1 = 1.4461 Australian dollars)

(By Melanie Burton, Roushni Nair and Anne Marie Roantree; Editing by Edwina Gibbs)