The Australian government has ordered the largest shareholder of rare earth company Northern Minerals Ltd. to sell its stake, the latest move by the government to force some Chinese investors to divest on national security grounds.

Australia’s Treasury Department issued a statement saying that the Perth-based mining company has six shareholders who must complete the sale of their shares within two weeks starting this Monday. According to the statement, five of the shareholders are registered in mainland China or Hong Kong, and the other is registered in the British Virgin Islands.

According to data compiled by Bloomberg, these six institutions together hold nearly 27% of the company’s outstanding shares, including the top four shareholders. The stock closed down 4.2% on the Sydney stock exchange, reducing the company’s market value to A$219 million (US$156 million).

The Australian government had already issued partial divestment orders in 2024, requiring five institutions to sell their holdings in Northern Minerals. Australia later also filed a lawsuit against a Chinese-funded enterprise for refusing to comply with the order, and won the case last year.

Northern Minerals announced in April this year that one of the investors ordered to divest this time, Hong Kong Ying Tak Ltd, is connected to three institutions that were required to divest in 2024. The mining company said on Monday that it is studying the latest order from Australia’s Treasury Department and will release relevant progress to the market in due course.

China’s Ministry of Foreign Affairs said it had not yet learned of the matter and urged Australia to respect the lawful and legitimate rights and interests of foreign investors.

Official data show that although the scale of bilateral direct investment between China and Australia has still not recovered to its pre-pandemic peak, China’s direct investment in Australia last year rebounded compared with 2024.

Australia, the United States and other Western countries have introduced restrictive measures to block China from entering the critical minerals and metals industries needed for the defense industry and energy transition. China currently holds a near-monopoly in rare earth mining and deep processing, and since last year China has also used rare earth export controls as a countermeasure in trade disputes.

Northern Minerals’ Browns Range project has not yet been formally developed, but it contains considerable heavy rare earth resources. Such heavy rare earths are widely used in the military industry and the manufacture of high-end electronic equipment. The project is located in the Pilbara region of Western Australia, and its subsequent development has received non-binding letters of support from both the Australian and U.S. governments.

I. Overview of Northern Minerals’ Rare Earth Project

1. Basic Information

Project name: Browns Range heavy rare earth project

Ownership: 100% held by Northern Minerals

Location: East Kimberley region of Western Australia, about 160 kilometers southeast of Halls Creek, near the Northern Territory border

Core value: A rare global high-dysprosium (Dy) and high-terbium (Tb) heavy rare earth deposit. Dysprosium and terbium are key raw materials for permanent magnets used in the military industry, new energy vehicles and wind power, and are listed as strategic minerals by the United States and Australia.

2. Resources and Production Capacity (Final Feasibility Study DFS, September 2025)

Mineral resources: 7.3 million tons, total rare earth oxide (TREO) grade 0.96%; ore reserves 5.18 million tons, TREO grade 0.88%.

Production plan: Mine life of 11 years, annual output of about 4,350 tons of TREO, concentrate grade 25%; first production expected by the end of 2028.

Global position: After production begins, it can meet 8% of global dysprosium and terbium demand, with dysprosium and terbium accounting for more than 70% of value. It is one of the most promising heavy rare earth projects outside China.

Supporting agreement: An offtake agreement with Australia’s Iluka Resources to initially supply 30,500 tons of TREO to its Eneabba rare earth refinery.

3. Strategic Significance

Both the U.S. and Australian governments have issued non-binding letters of support, viewing it as a core project to reduce dependence on Chinese heavy rare earths.

In October 2025, the United States and Australia signed an US$8.5 billion critical minerals agreement, focusing on supporting the construction of the rare earth industrial chain, including this project.

II. Situation of the Chinese Shareholders Involved

1. Overall Shareholding

Six entities together hold nearly 27% of Northern Minerals’ outstanding shares, including the top four shareholders.

Distribution of registration: 3 in mainland China, 2 in Hong Kong, and 1 in the British Virgin Islands (BVI).

2. Core Chinese Shareholders

Yuxiao Fund

Background: Registered in Singapore, actually controlled by Shandong Jinan Yuxiao Group (legal representative Wu Tao), a private enterprise.

Shareholding history: Invested since 2018, once the largest shareholder with a maximum stake of 9.81%; in 2023, its application to increase its stake to 19.9% was rejected by the Australian government, and its shareholding cap was set at 9.98%.

Current status: One of the targets of the first divestment order in June 2024, and again included in the clearance list in May 2026.

Hong Kong Ying Tak Ltd

Background: Registered in Hong Kong, connected to three institutions required to divest in 2024, and one of the core targets of this clearance.

Vastness Investment Group

Background: Described as Chinese-funded, it was the largest shareholder at the time of this clearance, holding about 7%.

Other Chinese Entities

Including 2 mainland-registered enterprises, 1 Hong Kong-registered enterprise and 1 BVI-registered enterprise (actually controlled by Chinese parties), all of which are continuation or related entities of the first divestment order in 2024.

3. Clearance Background

June 2024: The Australian government first ordered five Chinese-linked shareholders to divest (holding about 10.37%). Because some shareholders failed to comply and transferred shares to related parties (such as Ying Tak), Australia won the lawsuit in 2025.

May 18, 2026: The Australian government escalated again, ordering six Chinese-linked shareholders to clear all their holdings within 14 days, citing “national security and national interest.”

III. Core Summary

Project: Browns Range is the only high-grade heavy rare earth project in the West capable of large-scale production, directly challenging China’s monopoly in the global heavy rare earth sector.

Shareholders: The Chinese shareholders involved are mainly private capital (such as Yuxiao Group), and the core investment logic is strategic resource layout rather than state-owned enterprise leadership, Caixin reported.

Essence: Australia’s two forced clearances of Chinese capital are ostensibly national security reviews, but in reality they are part of a U.S.-Australia jointly led de-Chinaization of the global rare earth supply chain, focusing on heavy rare earths, an area where China has an advantage.