2 weeks ago
7
Chinese investors have attempted to circumvent Australian government orders to sell down a stake in a key rare earth mining project by shifting around millions of dollars of shares instead of offloading them, court documents allege.
The federal government is becoming increasingly alarmed by Chinese efforts to gain control over Australia’s strategically important mineral tenements, including supplies of rare earths needed to make an array of products such as electric motors, wind turbines and missiles and other military hardware.
Northern Minerals is working on a rare earth project in Western Australia.
Newly released court files detail for the first time the specifics of the Albanese government’s claim against one Chinese-linked investor, Indian Ocean International Shipping and Services Company, as it faces landmark proceedings for allegedly breaching foreign investment law.
The documents allege that one of the biggest shareholders in West Australian rare earths miner Northern Minerals late last year, Chinese national Jing Tian, was secretly holding stock on behalf of Indian Ocean. The allegations have not been tested and this masthead does not suggest they are true, only that they are made in filed court documents.
United Arab Emirates-based Indian Ocean was one of four stockholders ordered by federal treasurer Jim Chalmers in June 2024 to sell shares in Northern Minerals within 60 days because they were associate companies of a Chinese-controlled mining investor known as Yuxiao Fund.
Chalmers had previously blocked Yuxiao on national security grounds from doubling its Northern Minerals stake to nearly 20 per cent a year earlier, before soon discovering that some of Yuxiao’s associates, including Indian Ocean, had begun acquiring shares in the company and were amassing a growing combined interest.
Government documents provided to the Federal Court allege that Indian Ocean deliberately defied Chalmers’ stock sell-down order by transferring its 168,046,469 shares in Northern Minerals into the name of its own director and shareholder Tian, instead of properly disposing of them in August 2024.
Federal Treasurer Jim Chalmers has launched unprecedented action against a Chinese mining investor for alleged non-compliance with foreign investment laws.Credit: Alex Ellinghausen
Later that month, Tian transferred her entire interest in Indian Ocean to another woman, Ning Lyu, who then replaced Tian as Indian Ocean’s new sole director, the documents allege.
According to Northern Minerals’ latest available share register, Tian held more than 146 million shares in the company as of last September, making her its 11th largest individual investor, with a 1.75 per cent stake.
The Australian government solicitor said: “The treasurer made the disposal orders on the basis that he was satisfied the result of Indian Ocean’s actions of acquiring shares in Northern Minerals was contrary to national security.
Loading
“Rather than disposing of its interests in Northern Minerals as required by the disposal orders, Indian Ocean transferred those interests to its sole director and shareholder.”
Singapore-based Yuxiao Fund is controlled by Chinese national Wu Tao, chairman of China-domiciled Jinan Yuxiao Group, according to Northern Minerals’ market filings. Little is known about Wu, other than that his mining empire has interests in mineral exploration, extraction, processing and marketing in China and Mozambique.
Northern Minerals’ Browns Range project in Western Australia’s East Kimberley region sits on Australia’s best-known orebodies of dysprosium and terbium, two heavy rare earth elements needed in powerful heat-resistant magnets.
The project, which is in its early stages, is seen as strategically important because it could become the first significant non-Chinese source of dysprosium, and it would be able to supply heavy rare earths to Australia’s first fully integrated rare earths refinery being built by Iluka Resources at Eneabba in WA.
China’s mines and refineries currently produce most of the world’s rare earth metals, making them essential suppliers to foreign manufacturers of products as diverse as computers, smartphones, camera lenses, LED lights, electric vehicles, fighter jets and precision-guided weapons. China accounts for about 70 per cent of rare earth mining, and 90 per cent of the market for separation and processing.
Lynas’ Mount Weld rare earths mine in Western Australia.
But Australia and its allies, including the US, are racing to lessen their dependence on China, worried about Beijing’s willingness to use its market-dominant position as leverage in geopolitical and economic disputes.
Earlier this year, during tariff negotiations with the Trump administration, China announced a broad package of export curbs, which temporarily cut off global shipments of several sought-after heavy rare earth metals and rare earth magnets.
The Albanese government is trying to position Australia as a globally significant alternative source of rare earths and other critical minerals, earmarking billions of dollars in tax credits, cheap loans and equity stakes for companies building mines, processing plants and refineries.
Commenting on China’s rare earths export restrictions in April, Northern Minerals managing director Shane Hartwig said the company looked forward to playing a key role building Australia’s critical minerals future, “as the world re-thinks its reliance on single-source supply chains”.
“Our focus on heavy rare earths like dysprosium and terbium positions us at the heart of this shift — and our partnership with Iluka strengthens Australia’s ability to deliver at scale,” he said.
Jinan Yuxiao Group did not respond to a request for comment. Indian Ocean International Shipping and Service Company and Tian could not be reached for comment.
Most Viewed in Business
Loading
