The Australian government has ordered several investors linked to China to reduce their shares in Western Australian rare earth miner Northern Minerals. 

A disposal order issued on Sunday by Australia’s treasurer Jim Chalmers ordered Yuxiao Fund and four associates to dispose of their shares in the company. Yuxiao, a Singapore-registered private investment vehicle controlled by Chinese businessman Wu Yuxiao, has 60 days to dispose of 80 million shares it acquired last September, according to the order seen by Kallanish

British Virgin Island-registered Black Stone Resources, United Arab Emirates-based Indian Ocean International Shipping and Service Company, as well as investors Ximei Liu and Xi Wang have also been ordered to reduce their shares in 60 days.

A spokesperson for the treasurer on Monday said the move comes in a bid to protect Australia’s “national interests.”

“The decision, based on advice from the Foreign Investment Review Board (FIRB), is designed to protect our national interest and ensure compliance with our foreign investment framework,” the spokesperson notes.

Northern Minerals is currently developing the Browns Range heavy rare earths project in northeastern Western Australia. The project has a mineral resource estimate of 10.81 million tonnes 0.76% total rare earth oxides (TREO). The company in 2022 signed an agreement with Iluka Resources to supply xenotime concentrate to feed Iluka’s under-construction rare earths refinery at Eneabba. 

Last October, Northern Minerals contacted FIRB raising concerns over Yuxiao raising its stake in the company through associated funds.

“It appears that the treasurer has concluded that the acquisition of the relevant shares was inconsistent with the requirements of the Foreign Acquisitions and Takeovers Act 1975 (Cth) and the previous prohibition order made by the treasurer,” Northern Minerals says in a statement on Monday.

According to a recent International Energy Agency (IEA) report, China accounted for 92% of the global rare earth refining output and 62% of mining in 2023. In an effort to develop an ex-China rare earth elements supply chain, the Australian government has been increasing funding for domestic projects in recent months. This includes granting AUD 840 million ($550m) to Arafura’s rare earth mine and refinery in the Northern Territory in March.