It has been an important month for Australia’s ambitions to become one Critique-minerals superpower, balancing its relations with China and the United States.
On May 18, Treasurer Jim Chalmers DESIGNATED he had ordered six investors with links to China to sell shares in Northern Minerals, an Australian rare earths company that develops Browns Range Project in Western Australia.
Then, on May 21, mining company Arafura Rare Earths DESIGNATED is planned Nolans is mine of rare earths in the Northern Territory would go ahead. This came after the federal government pledged to buy 500 tonnes of rare earths from the project for Australia. Strategic Reserve of Critical Minerals.
Both movements matter. One signals a major change in the way Australia controls foreign investment, moving from one-by-one vetting transactions to strengthening ongoing oversight of foreign ownership and influence.
The other shows how Australia, in line with the US, is moving to build its critical minerals capability.
But this is not without risks. For the US, the removal of Chinese investment is a direct victory for national security. But Australia must also work out whether it can build and run these expensive projects without Chinese participation.
Minerals of the North Browns Range Projectlocated in the north of Western Australia, it is strategically important because it contains heavy rare earths – especially dysprosium and terbium.
These elements are essential for high performance magnets used in electric vehicles. They are also used in offshore wind turbines and advanced defense weapons.
The Browns Range is one of the world’s few high-grade rare earth deposits outside of China and Northern Minerals is the only developer in Australia of this type of asset. The company estimates that once in production, this mine can supply about 8% of the global demand for these minerals.
Ordered to sell
China-linked investors in Northern Minerals, who together own a 17.58% the company’s shares, have been given a deadline until July 2 to divest.
The federal treasurer did not go into specific details about the reasons for that decision. But he said it was “in line with advice from the Treasury and the Foreign Investment Review Board and is about protecting our national interest”.
of Australia Foreign Investment Review Board exists to advise the treasurer on whether specific foreign investments are good for Australia. And sell orders like this are not unprecedented.
But the case of Northern Minerals illustrates the strict political conditions associated with financing critical minerals projects when alignment with the US is a factor. For Northern Minerals, this pressure has not appeared overnight. The government has been applying it for years.
In 2023, Chalmers blocked one linked to China fund from expanding its stake in the firm. Then, in 2024, he BOOKED five foreign investors to sell their shares in the firm. This resulted in Federal Court action in 2025 after an investor ignored the order.
The message is clear: scrutiny of Australia’s foreign investment now extends beyond the question of who owns the majority of a company on paper. You are viewing:
- who else can make decisions and pocket money despite not being mentioned on paper (something known as “beneficial ownership“)
- if investors are transferring shares to their partner companies or allies when they are ordered to sell (known as “related party transfers”)
- who has voting rights and potential influence on the board.
The fact that an investor holds a minority stake is no longer automatically seen as low risk.
Competition between the US and China for critical minerals is intensifying. The US and its allies are increasingly coordination of efforts to reduce their dependence on China – which still dominates manufacturing globally.
However, the US-led alliance faces deeper fissures than appear on the surface.
Washington is prioritizing it secure mineral inputs for defense production. Its industrialized allies in East Asia and Europe also want security of supply, but they do not want to completely abandon low-cost, high-purity Chinese inputs.
For Australia, supply chain security is important. However, she wants more. Hers Critical Minerals Strategy the document outlines a plan for more domestic processing to create jobs and boost domestic industry in the long term.
That is, Australia wants to transcend its reputation as simply “world quarry”, to do more with our minerals here.
Safety is not a skill
In all countries associated with the US, strategic reservesbuyers guaranteed by the state and allied export credits are turning rare earths into “credentialed commodities.” That is, their value depends more and more on where they came from, rather than simply on price and purity.
But blocking Chinese investment will not automatically build Australia’s industrial capability.
Perth-based Lynas Rare Earths exemplifies this challenge. In 2025, she became the first Non-Chinese operator to separate dysprosium and terbium on an industrial scale. Although its production remains small in commodity-market termsproved that China’s long-standing technical monopoly is not unbreakable.
But company separation processes support a lot on Chinese specialized equipment and chemical inputs.
The lesson for Australia is that supply chain security cannot be achieved through ownership changes alone. of Beijing expanding export controls on rare earth minerals, processing chemicals and refining equipment further strengthen its influence.
If security rules are applied too widely, they can increase costs and complicate investments. The listing of Chinese investors – once transactions have taken place – also risks unsettling other foreign investors considering investing in Australia.
As a country with deep ties to both China and the US, Australia faces a difficult balancing act in protecting its own interests without sidelining either major power.
Marina Yue Zhang is an associate professor of technology and innovation, University of Technology Sydney
This article was reprinted from Conversation under a Creative Commons license. Read on original article.
