Australia moves to curb Chinese investment in rare earths sector

May 26 (Asia Today) -- Australia is moving to reduce Chinese involvement in its rare earths industry as part of efforts to become a major critical minerals power, though experts say the country remains deeply dependent on China for processing technology and supply chains.

The Australian federal government ordered six Chinese-linked investors to sell their combined 17.58% stake in rare earths developer Northern Minerals on national interest grounds, according to local media reports Sunday.

Northern Minerals is developing the Browns Range project in Western Australia, which mines heavy rare earth elements such as dysprosium and terbium used in electric vehicle magnets, offshore wind turbines and advanced defense systems.

The company expects the mine to eventually supply about 8% of global demand for the minerals once full-scale production begins.

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Analysts said the move reflects a broader shift in Australia's foreign investment review process. Instead of focusing only on the legal structure of individual transactions, authorities are increasingly examining who exercises real decision-making influence, whether shareholdings are coordinated among related entities and how much influence investors hold over company boards.

Experts said even minority stakes are no longer automatically viewed as low-risk investments.

However, analysts also warned that removing Chinese capital alone will not guarantee Australia's industrial independence because the most difficult part of the rare earths business lies not in mining but in the highly complex and hazardous refining and separation process.

China continues to dominate the global rare earths industry in processing technology, specialized equipment and manufacturing know-how.

Beijing further strengthened that position in 2023 by banning exports of rare earth processing and separation technologies, limiting the ability of foreign competitors to develop alternative supply chains.

Companies outside China also face difficulties securing chemical inputs and reagents required for rare earth separation, while industry experts say operational expertise cannot be quickly replicated even if foreign firms acquire equipment.

Lynas Rare Earths has successfully produced dysprosium commercially at its Malaysian processing plant, but the company still sends a significant portion of output to China for final refining.

Industry experts estimate it could take at least five to 10 years for Australia and its allies to independently establish advanced refining facilities.

As competition intensifies between the United States and China over critical minerals, Australia faces growing pressure to balance security ties with United States against its continued dependence on Chinese supply chains.

The United States has pushed allies to secure minerals for defense industries, while many countries remain reliant on lower-cost Chinese processing networks.

Experts said Australia will need to pursue a carefully balanced diplomatic strategy while building its own refining capabilities if it hopes to become a true critical minerals power.

-- Reported by Asia Today; translated by UPI

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Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260526010007415