The decision marks the second time Chinese investment has been denied in the Land Down Under.
Australia has prohibited the takeover of Alita Resources Ltd, a financially troubled lithium miner, by a China-linked company based on advice from its Foreign Investment Review Board (FIRB), Reuters reports. The move comes as Australia seeks to strengthen trade ties with the U.S. and its allies and diversify supply chains for critical minerals like rare earths and lithium, used among others in electric car batteries, defense technologies, and clean energy infrastructure. Australia is the world’s largest lithium producer and plays a crucial role in energy transitions in countries around the globe. The largest country in Oceania has announced to probe foreign investments in its mining sector more strictly last year citing national interests as a criterium for approval.
Second Time This Year That Chinese Investment was Denied
The FIRB’s decision marks the second time this year that Chinese investment in critical minerals has been blocked. Austroid Corporation, a U.S.-based company’s local subsidiary, had sought to acquire an additional 90.10% of Alita Resources to take its stake to 100%. However, the acquisition was barred by Treasurer Jim Chalmers through a prohibition order. The director of Austroid Australia, Mike Que, reportedly has ties to the Chinese mining industry, and previous attempts for Chinese investments in Alita were also blocked by FIRB. According to Reuters, China’s top diplomat has criticized Australia in the past for blocking Chinese investments on national security grounds, but Chalmer’s office declined to say whether the acquisition had been blocked on national interest grounds or the ties to China, Reuters adds.
Despite Two Bans, Chinese Investment in Australia on a Six-Year High
Regardless of these bans, Chinese investment in Australia increased in 2022 for the first time since 2016, according to a report by the University of Sydney Business School and KPMG. Beijing invested roughly AUS$ 2.1 billion (roughly US$1.5 billion) in Australia, primarily in the mining sector. The two blocked acquisitions are hence no indication of Australia attempting to block all of China’s investments and present individual case decisions.
Additionally, in the context of supposedly strained relations with China, Australia has been calling for progress in lifting trade restrictions on its exports. The People’s Republic had just recently announced to impose export restrictions on the technology metals gallium and germanium from August this year. This raised fears of an escalating trade war between China and the West.