Two Chinese firms have been blocked from investing in Australia’s valuable rare earth mineral sector in the past week.
It comes in the midst of tightening foreign investment rules during the virus outbreak and aligns with the federal government’s ongoing partnership with the United States to ensure rare earth supply chains are secure and not dominated by China.
On April 20, Treasurer Josh Frydenberg blocked a bid by Baogang Group Investment to invest $20 million (US$12.8 million) in Northern Minerals who operates a major rare earths project in Western Australia (WA).
The Chinese group is a subsidiary of the state-owned enterprise Baogang (or Baotou) Group, which runs the Bayan Obo Mining District in Inner Mongolia—the largest rare earths deposit in the world.
Northern Minerals operates the Browns Range Project, which covers a vast 3,595 square kilometre area (1,388 square miles) in the East Kimberley region straddling the border of WA and the Northern Territory.
The site is rich in rare earths, particularly dysprosium—an element mainly used in magnets for electric vehicles and wind turbines.
The company’s website touted Browns Range as the only non-Chinese producer of dysprosium.
On April 24, Yibin Tianyi Lithium Industry withdrew a proposed investment following advice it would be rejected by the federal government.
One of Yibin’s backers is China’s largest lithium-ion battery manufacturer Contemporary Amperex Technology.
Yibin was aiming to invest $14.1 million (US$9 million) in AVZ Minerals, which operates the Manono Project in the Democratic Republic of Congo. The project is a major producer of lithium.
According to a statement from AVZ Minerals, the federal government advised Yibin that the investment would be “contrary to the national interest” and contrary to the growth of “Australia’s critical minerals sector.”
Yibin and AVZ are currently looking for alternative ways to work together.
Rare earths are 17 metallic elements essential for the manufacture of 200 high tech products, including smartphones and fibre optic cables.
David Wilcox, a board member of Central American Nickel, told NTD that many tech industries are beholden to the Chinese communist regime due to its control over these vital metals.
“Erbium. This is key to the development of fibre optic cables which is key to developing 5G networks,” he said. “So, if we start right there in the beginning, Huawei might have lost the battle, but China’s winning the war because China has 100 percent control around the erbium market.”
Late last year, the Australian and U.S. governments formalised an agreement to begin exchanging information on the resource potential in each country, and to develop pathways for supply arrangements.
On April 22, Australian rare earth mining firm Lynas Corporation won a tender from the U.S. Department of Defense to design a rare earth separation facility. This would allow processing of ore to be done in the United States rather than be sent abroad.
In 2018, the Chinese communist regime produced 70 percent of the world’s rare earth minerals. The regime’s dominance of the sector has come under scrutiny in recent years as it has used its market power to enforce its geopolitical interests.
In 2010, the regime cut off rare earth exports to Japan following a dispute over the Senkaku Islands.
During the U.S.–China trade war, China’s state media outlet People’s Daily ran an editorial on May 2019: “Will rare earths become a counter-weapon for China to hit back against the pressure the United States has put on for no reason at all? The answer is no mystery.”
To counter any future risk, the Australian government has been actively developing its rare earths sector.
“Australia is seizing the opportunities to be a powerhouse for critical mineral and rare earth production,” according to Minister for Resources and Northern Australia Matt Canavan.