Australia just made two bold moves that signal a major shift in how it handles foreign investment in critical minerals. Treasurer Jim Chalmers ordered six Chinese-linked investors to sell their shares in Northern Minerals, a company developing one of the world's few high-grade heavy rare-earth deposits outside China. Days later, the government committed to buying 500 tonnes of rare earths from Arafura Rare Earths to help launch a new domestic strategic reserve.
The stakes are high. Northern Minerals' Browns Range project in Western Australia contains dysprosium and terbium — minerals essential for EV motors, offshore wind turbines, and advanced weapons. Once in production, the mine could supply around 8% of global demand. But this isn't without risks. For the US, kicking out Chinese investment is a straightforward win for national security. But Australia also has to work out if it can build and run these expensive projects without Chinese participation.
Australia's foreign investment scrutiny now extends beyond the question of who owns the majority of a company on paper. Authorities are examining beneficial ownership, related-party transfers, and board influence — meaning even a minority stake can trigger a divestment order. This case has already led to Federal Court action after one investor defied an earlier order.
Australia wants more than just security — it wants to shed its image as the "world's quarry" and build real industrial capability at home. But as Chinese investment is pushed out, the country faces a tough question: who exactly will step in to fund and operate these enormously complex, capital-intensive projects?
