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Exposed: Chinese heavy hitters linked to rare earths battle

Brad Thompson

The company accused of covert attempts to gain control of Northern Minerals has ties to Chinese conglomerates tasked with maintaining a stranglehold on rare earths supply.

Singapore-registered Yuxiao Fund has signed a co-operation agreement with rare earths giant China Northern and Shanghai-listed Shenghe Resources in front of a host of Communist Party officials.

The agreement was hailed as a breakthrough in extending China’s reach in rare earths around the same time Northern Minerals became concerned about trading in its stock and referred several transactions to the Foreign Investment Review Board.

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Yuxiao’s Wu Tao, left, signing a co-operation agreement with the leaders of China Northern and Shenghe Resources.

Northern Minerals is developing the strategically important heavy rare earths Browns Range project in Western Australia. The mine will supply Australia’s first fully integrated rare earths refinery being built by Iluka Resources with a $1.25 billion loan from the federal government. Australia, along with the United States and other allies, is trying to break China’s stranglehold on the refining of heavy rare earths materials essential in the military and weapons systems, and in other industries.

China Northern director Meng Fanying said the new agreement with Yuxiao and Shenghe was “another important measure to thoroughly implement the spirit of … Xi Jinping’s important instructions on the development of the rare earth industry."

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Yuxiao, led by Chinese businessman Wu Tao, is targeting Northern Minerals boss Nick Curtis as an investigation continues into whether recent share trading is above board.

Mr Wu is pushing for a seat on the Northern Minerals board. Northern Minerals is also examining two other candidates nominated for board seats “to understand whether there are links between these individuals and other shareholders in the company”.

Yuxiao has requisitioned Northern Minerals to call a meeting in an attempt to dump Mr Curtis as executive director and give it access to the company’s books.

The push to dump Mr Curtis comes after the Northern Minerals board told Yuxiao it had to seek FIRB approval in order for Mr Wu to become a director. It is unclear if Yuxiao has sought that approval but earlier this year, acting on FIRB advice, Jim Chalmers blocked Yuxiao increasing its stake in Northern Minerals to 19.9 per cent from 9.81 per cent.

Details of the co-operation agreement with China Northern and Shenghe, China’s biggest importer of rare earths, were published by Yuxiao earlier this month. The agreement, according to Mr Wu and other senior officials, would boost the international influence of China’s rare earths industry.

Former defence minister Kim Beazley said the “game was up” for China – a reference to controlling global heavy rare earths – if Iluka could source dysprosium and terbium from Browns Range and succeeded in building a full-integrated refinery at Eneabba in WA.

“Terbium and dysprosium are pretty essential for the permanent magnets used in weapons systems to give them extreme accuracy,” said Mr Beazley, who is an advisor to Lockheed Martin, which uses heavy rare earths in its F-35 fighter jets.

“This must be under our control,” he said of Browns Range. “FIRB has been having a real hard run against efforts to somehow give Chinese individuals control of Browns Range.”

China Northern is one of the major rare earths producers left controlling the industry after the Communist Party opted to consolidate the number of operators. Shenghe is China’s global rare earths company, with ownership stakes and offtake agreements covering international assets, including the only operating rare earths mine in the US.