Australia's Global Lithium seeks government help, alleging Chinese control attempt

Northern Minerals

10/02/2025 02:32

* 
      Global Lithium shareholders due to vote on board nominees
on
Thursday
    

        * 
      Foreign Investment Review Board weighs whether investors
breached foreign takeovers act
    

        * 
      Management alleges China-linked shareholders seek control
of key
asset
    

        * 
      Takeovers panel rejects company's claim investors seek
control 
    

  
    By Melanie Burton
       MELBOURNE, Feb 10 (Reuters) - Australia's Global Lithium
Resources  GL1.AX  is pressing the government to halt what it
calls a takeover attempt by Chinese investors of its cornerstone
asset ahead of a shareholder meeting this week.
    The company is counting on government intervention after the
nation's Takeovers Panel declined last week to review what
Global Lithium says may be an unlawful association among
China-linked shareholders seeking to control its Manna lithium
project in Western Australia.
    The company's campaign poses a test for a government that is
pushing for critical minerals projects to drive economic growth
and boost security links with the United States, its key global
ally, while not wanting to anger its top resources customer,
China.
    Global Lithium management wants Australia's treasurer, who
receives advice from the Foreign Investment Review Board, to
force the shareholders pushing for board changes to sell down
their stakes. The treasurer could block them from voting at
Thursday's shareholder meeting, the Western Australia Supreme
Court said in a ruling in November.
    The company froze development of its Manna lithium project
late last year amid a protracted downturn in the battery raw
material market.
        Global Lithium management alleged in filings with
regulators that director Dianmin Chen was working with a group
of foreign-linked investors holding between 30% and 40% of
shares to take control of the board and its main asset.
        
    ALLEGATIONS OF POTENTIAL ILLEGALITY 
    Led by Executive Chairman Ron Mitchell, Global Lithium
management has advised shareholders to reject proposals to
reappoint Chen, appoint other Chinese-born directors and cap the
board at three directors.
    Chen did not respond to requests for comment.
    Mitchell alleges an undisclosed association among
shareholders may violate Australia's takeover laws and the
foreign takeovers act. He made the accusations in filings to the
Australian Securities Exchange, the Western Australian Supreme
Court, and in a report to Australia's Treasury last year.
    "The concerns include the potential for transfer of
effective control of Global Lithium’s 100% owned Manna Lithium
Project...without a control transaction taking place or premium
being paid," Global Lithium said in a November 15 ASX filing,
adding Treasury is treating the allegations "very seriously".
    Global Lithium and Mitchell said they could not comment on
the board fight beyond their public statements as the issues are
before regulators.
    The Treasury said it could not comment on any foreign
investment cases due to protected information provisions under
the Foreign Acquisitions and Takeovers Act of 1975.
    The Takeovers Panel declined to review the company's request
for a finding of unacceptable circumstances, saying evidence
pointed to "shareholder pressure rather than combining for
taking of control."
    In 2023, Australia blocked a Chinese investor from raising
its stake in a rare earths mining company on advice from the
Foreign Investment Review Board. The review board did not
respond to a request for comment on the Global Lithium dispute.
          
    CHINA TIES
    With close to 10% each, Global Lithium's top two
shareholders are Australia's Mineral Resources  MIN.AX  and
Canmax Technologies  300390.SZ , which is controlled by Chinese
billionaire Pei Zhenhua who made his fortune in battery giant
CATL. 
    Canmax did not respond to requests for comment for this
story. Mineral Resources declined to comment. 
    In August, Chinese-born property developer Liaoliang (Leon)
Zhu who controls Sincerity Group, Global Lithium's third biggest
shareholder, pushed to join the board in a letter to
shareholders.
    "We need to stay focused on our core lithium assets and stop
pretending that a short term strategy of exploring for gold and
copper is a valid response to the shocking decline in
shareholder value," he said on his website. 
        Zhu, through a lawyer, pointed to the Takeovers Panel's
findings and declined to comment further.   
    A board controlled by Zhu and Chen could overrule Mitchell
at a crucial time as the company looks to ink a new sales deal
after a ten-year supply deal with Canmax lapsed in December.
($1 = 1.5924 Australian dollars)

 (Reporting by Melanie Burton; Editing by Sonali Paul)
 ((melanie.burton@thomsonreuters.com Twitter: @MelanieMetals;
+613 9286 1421; Reuters Messaging:
melanie.burton.thomsonreuters.com@reuters.net))