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China calls off investment in Australian miner
Published on: 2009-09-25
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SYDNEY -- An Australian miner says a Chinese company has called off a multimillion-dollar investment after a government panel barred it from acquiring a majority stake.

Lynas Corp.'s announcement Thursday was a setback for Chinese efforts to acquire mining and other resource assets and came as an official said Australia wants to limit ownership of resource industries by foreign state-owned companies.

Lynas said China Nonferrous Metals Corp. pulled out of a planned investment after the Foreign Investment Review Board said its stake would be limited to less than 50 percent and it had to reduce the number of board seats it would receive. Lynas mines rare earths - exotic metals that are used in high-tech and clean energy products.

Chinese mining companies have invested billions in Australian mining and metals companies but the deals have stirred opposition from some Australian lawmakers who say state-owned foreign companies should not be allowed to control key resources.

Lynas says its deposit of rare earths at Mount Weld in the state of Western Australia is the world's richest. Rare earths include dysprosium, terbium, thulium, lutetium and yttrium and are used in magnets, computer disk drives and other products.

CNMC was to have invested 252 million Australian dollars ($218 million) in Lynas, the Australian company said earlier. Lynas said it was lining up alternative financing to ensure it had adequate working capital.

Meanwhile, the investment board's director, Patrick Colmer, said Thursday it would prefer that foreign state-owned companies limit their stakes in major Australian mining assets to 15 percent, according to The Age and Australian Financial Review newspapers.

Australia's government has required changes in other planned Chinese investments in mining on national security grounds.

On Thursday, the Australian defense minister said his ministry vetoed a Chinese investment in a magnetite mine in the Woomera missile testing range in the Outback. It was the second time this year the government has blocked Chinese investment in the area.

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