Australia prevents companies associated with China from acquiring lithium mines

On Friday, a spokesperson for Australian Finance Minister Jim Chalmers stated that under the recommendation of the Australian Foreign Investment Review Board (FIRB), Australia has prohibited a company associated with China from acquiring financially troubled lithium miner Alita Resources Ltd.

Australia supplies about half of the world's lithium and other minerals, including rare earths used in electric vehicles and defense batteries. As the world promotes supply chain diversification and distancing itself from the dominant producer China, China is seeking to promote trade with the United States and its allies.

This is the second time this year that the board of directors has decided to block China's investment in key minerals.

Chalmers has issued a restraining order to prevent Austroid Corporation from acquiring an additional 90.10% stake in lithium miner Alita Resources, which will bring its shareholding to 100%.

A prohibition notice shows that Austroid Australia, a local subsidiary of Austroid headquartered in the United States, is also prohibited from fully acquiring Alita.

According to company documents, the director of Austroid Australia is a Chinese citizen with experience in the Mining Industry in China.

Alita has been under management since 2019. Austroid stated in a statement that it is "shocked and disappointed" by the decision to block the acquisition transaction of converting debt into equity, and stated that it has not fully understood the impact on the operation of the Bald Hill lithium mine exported to China.

Austroid stated that after appointing management personnel in 2019, the company has invested a significant amount of funds in Bald Hill, enabling it to restart operations in 2022.

Alita's manager, McGrath Nicol, stated in a notice to shareholders on Wednesday that Austroid has withdrawn its application to the FIRB board of directors and intends to submit a new application.

Chalmer's office refused to disclose whether the acquisition was blocked due to national interests.

The file shows that the director of Austroid Company is Mike Que. He is the son of Kui Wenbin from China, who has a significant interest in the Chinese lithium battery manufacturer Sichuan Western Resources Company.

Mike Que is also the sole director of China Hydrogen Energy Limited (CHEL), a Cayman Islands company, whose documents indicate that the company was unable to obtain FIRB approval for its attempt to acquire Alita in 2019.

Beijing has previously criticized Australia for blocking Chinese investment on national security grounds. After meeting with Foreign relations of Australia's Foreign Minister Huang Peini last week, Wang Yi, China's top diplomat, said that Australia should provide a "non discriminatory business environment" for Chinese enterprises to invest in Australia.

A report from the Ministry of Finance in July showed that in the first quarter of 2023, China withdrew from Australia's top ten sources of foreign investment.

Chalmers this week called for more progress in China's lifting of trade restrictions on Australian exports before Prime Minister of Australia Anthony Albanese plans to visit Beijing.