Australia tightens divestment rules for Northern Minerals investors

Australia has tightened the conditions under which two offshore shareholders of Northern Minerals must sell their stakes, the rare earths developer said on Monday. The move extends Canberra's scrutiny of Chinese-linked investment in the sector.

The amended directions apply to Real International Resources, registered in the British Virgin Islands, and Hong Kong-registered Qogir Trading & Service. Under the revised terms, these entities cannot dispose of their shares unless the proposed sale is first notified to the Treasurer, who must confirm that the buyer is not an associated party.

The changes build on an earlier order from May, when Treasurer Jim Chalmers directed six offshore shareholders to divest their holdings over concerns that Chinese-linked parties were seeking control of the company. Those shareholders were collectively ordered to sell 1.68 billion shares to non-associated parties by July 2.

Northern Minerals is developing the Browns Range heavy rare earths project in Western Australia. The project is seen as strategically important as Western governments work to reduce their dependence on China for rare earths, which are essential for semiconductors and defence equipment.

Shares in Northern Minerals rose as much as 3.9% to A$0.027 in early trading, while the broader ASX200 index was down 0.3%.