Northern Minerals’ China links ordered to sell down stakes just a week after whistleblower executive resigns

A Chinese businessman and associates have been ordered by Treasurer Jim Chalmers to sell down their stakes in aspiring rare earths play Northern Minerals, as Australia looks to keep its critical minerals out of the Middle Kingdom’s reach.

Five entities will have to dump 10.4 per cent of Northern Minerals stock, equating to about 613.6 million shares, under orders issued by the Foreign Investment Review Board.

Northern Minerals flagged its suspicions about the purchase of those shares last year and the board requested FIRB investigate. That move was spearheaded by the executive chairman at the time — Nick Curtis.

Tao Wu and the Singapore-registered investor he is said to control, Yuxiao Fund, will essentially have 91 days to offload the 80m shares bought on September 6. If the stock is not sold by the deadline then Treasury will forcibly seize the shares and sell them.

Black Stone Resources, registered in the British Virgin Islands, will need to sell down 166.7m shares acquired on the same day, while the Indian Ocean International Shipping and Service Company — headquartered in the United Arab Emirates — must relinquish 165m shares purchased between May 12, 2022 and March 14, 2023.

FIRB also issued orders against 100m shares owned by China-based Ximei Liu and 101.9m shares owned by Singapore-based Xi Wang.

The Northern Minerals board had asked FIRB to probe whether Tao Wu and Yuxiao Fund tried to covertly increase their stake in the ASX-listed company in breach of a Federal Government ban.

Yuxiao was barred by Mr Chalmers in February last year from increasing its stake to 19.9 per cent.

A spokesman for Mr Chalmers said the orders were designed to protect Australia’s national interest “and ensure compliance with our foreign investment framework”.

“Australia operates a robust and non-discriminatory foreign investment framework, and will take further action if required to protect our national interest in relation to this matter,” he said.

Shares in the $192m-valued Northern Minerals were trading flat at 3.6¢ by noon on Monday. Barely $60,000 worth of stock had changed hands by that time.

Monday’s ruling follows a tumultuous week for the Perth-based company which is working to establish itself as a key part of the country’s rare earths supply chain through its Browns Range project, 145km south of Halls Creek in the East Kimberley.

Yuxiao responded to its FIRB referral by Northern Minerals by using its 9.8 per cent stake in the company to requisition a shareholders meeting called for June 6 to overthrow Mr Curtis and access the company’s books.

But investors were told last week that Mr Curtis “resigned from the role” to become a “strategic advisor” to the company.

He was replaced by prominent pro-China businessman Adam Handley, who has been a non-executive director of the company since December 2021.

Mr Handley is also the immediate past president of the Australia China Business Council WA and “specialises in advising North Asian investors and their Australian counterparts to bridge successful business relationships”, according to Northern Minerals.

The company is targeting a final investment decision for Browns Range in the March quarter of next year.

The ore from Browns Range is set to be fed into Iluka Resources’ future Eneabba rare earths refinery.

Iluka itself has a 2.1 per cent stake in Northern Minerals.

Rare earths are mineral elements that have national defence applications as an input to create high-tech magnets and lasers.