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China rare earths investment blocked: A sign of things to come

China rare earths

As Australia looks to create trusted critical minerals supply chains, Treasurer Jim Chalmers recently blocked a China company’s request to boost its investment in rare earths player Northern Minerals.

Yuxiao Fund applied last year to the Foreign Investment Review Board (FIRB) to increase its stake in Northern Minerals from 10 per cent to 19.9 per cent, but the FIRB recommended the application be turned down and Chalmers signed a prevention order on February 15 to officially block the move.

This highlights two things: that Australia is increasingly becoming a hotbed for critical minerals investment, and that the Australian Government understands the importance of protecting its local assets.

According to Reuters, it was the first time a Chinese investment had been blocked since Chalmers said in November the Russia–Ukraine war had elevated concern about the concentrated nature of the China-dominated critical minerals supply chain.

The rare earths market in particular is dominated by China, with the country controlling 60 per cent of global rare earths supply according to 2022 data from the United States Geological Survey (USGS).

And while China has many of its own established rare earths companies and operations, the country has historically had a strong international investment footprint. But it appears it will no longer be getting a free pass, which could pave the way for more investment opportunities for local parties.

We have seen the likes of Australian mining magnates Andrew Forrest and Gina Rinehart boost their rare earths participation of late.

Through his private company Wyloo Metals, Forrest supported advanced rare earths aspirant Hastings Technology Metals with a $150 million cornerstone investment last year.

Rinehart’s private company Hancock Prospecting committed to invest $60 million as part of Arafura Rare Earths’ $121 million share placement in December. Arafura is developing its Nolans rare earths project in the Northern Territory.

While Mineral Resources boss Chris Ellison is VHM Limited’s biggest shareholder. VHM recently listed on the ASX and is advancing its Goschen rare earths and mineral sands project in Victoria towards first production as early as 2025.

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