China And Australia In New Rare Earths And Iron Ore Disputes

Australia and China are edging closer to a re-run of their 2020 trade war as a double-header minerals dispute breaks out over iron ore exports and rare earth investment.

The undeveloped Browns Range rare earth deposit in the north of Western Australia is an asset wanted by both Chinese investors and the U.S. Government.

Terbium and Dysprosium are at the heart of a new rare earths dispute

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Rich in the so-called heavy rare earths of dysprosium and terbium used in advanced weapons systems, Browns Range is owned by a small Australian stock exchange (ASX) listed company, Northern Minerals.

Plans to start mining Browns Range are advanced with the U.S. Government’s Export-Import Bank considering a $250 million loan to part fund ongoing work.

But that deal is being jeopardized by secretive Chinese investment in Northern Minerals, sparking a flurry of corporate activity last week, including a request by the company to Australian corporate regulators to postpone its annual meeting scheduled for later this week.

The company said in a statement filed with the ASX that it was concerned that Chinese investors, who had been ordered to sell their shares in the Australian company, had defied the order from the Australian Government and retain effective control of a large parcel of shares

Chinese interest in Northern Minerals has prompted previous intervention by the Australian Treasurer (Finance Minister), Jim Chalmers, under foreign investment laws.

The company said it wanted it’s meeting postponed to ensure full transparency with government agencies “both in Australia and overseas, in relation to potential funding support for the Browns Range development”.

Iron Ore Coincidence

At the same time Northern Minerals was calling for government help in identifying Chinese investors in its shares, and whether they were connected to people and companies previously ordered to sell, a long-running dispute over iron ore prices took a fresh twist with a report of a ban by China on a type of iron ore.

At first glance the rare earth investment clash and the iron ore ban might not appear to be connected but because Chinese is the common thread there is a chance that what’s happening at Northern Minerals has provoked a response from the relativity new China Mineral Resources Group (CMRG).

Established by the Chinese Government to oversee and coordinate all mineral trading there is little doubt that the CMRG will be fully aware of what’s happening at Northern Minerals, especially given the political sensitivity of rare earths.

According to the Australian Financial Review newspaper, Chinese steel mills have been instructed by the CMRG to not buy a low-grade ore called Jingbao fines from Australia’s biggest mining company, BHP.

If correct, the Jingbao order is second BHP iron ore product to be backlisted, following a similar earlier this year for Chinese steel mills to not buy Jimbelbar fines.

Both the Jingbao and Jimblebar material is secondary to BHP’s overall iron ore exports, but the message is clear, China wants BHP and other iron ore exporters to cut their prices to aid the country’s steel industry, starting with a demand that all iron ore is transacted in Chinese currency, not U.S. dollars.

The iron ore dispute has not yet affected the marker price of the material which is based on high-grade ore. It was last quoted on the Singapore Exchange at $104.25 a ton, where it was a month ago.