Melbourne: Australia’s Global Lithium Resources is urging government intervention to prevent what it describes as a takeover attempt by Chinese investors of its cornerstone asset, ahead of a crucial shareholder meeting this week.
The company turned to authorities after the nation’s Takeovers Panel declined last week to investigate what Global Lithium claims could be an unlawful association among China-linked shareholders seeking control of its Manna lithium project in Western Australia.
This dispute presents a challenge for the Australian government, which is aiming to develop its critical minerals sector to drive economic growth and strengthen security ties with the United States while managing its complex trade relationship with China, its top resources customer.
Call for Government Action
Global Lithium’s management is pressing Australia’s Treasurer, who is advised by the Foreign Investment Review Board, to force the shareholders advocating for board changes to reduce their stakes. The Treasurer could also block them from voting in Thursday’s shareholder meeting, a move permitted by a ruling from the Western Australia Supreme Court in November.
The dispute arises as Global Lithium halted development of its Manna lithium project late last year due to a prolonged downturn in the battery raw materials market.
Allegations of Unlawful Coordination
The company has accused director Dianmin Chen of collaborating with a group of foreign-linked investors who collectively hold between 30% and 40% of shares to seize control of the board and its primary asset.
Led by Executive Chairman Ron Mitchell, Global Lithium’s management has advised shareholders to reject proposals to reappoint Chen, install additional Chinese-born directors, and cap the board at three members. Chen did not respond to requests for comment.
Mitchell has alleged that an undisclosed shareholder alliance could be in violation of Australia’s takeover laws and the Foreign Acquisitions and Takeovers Act. He raised these concerns in filings with the Australian Securities Exchange, the Western Australia Supreme Court, and 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,” the company stated in a November 15 ASX filing, emphasizing that Treasury is taking the allegations “very seriously.”
Both Global Lithium and Mitchell have declined further comment, citing ongoing regulatory scrutiny. Australia’s Treasury, citing confidentiality provisions under the Foreign Acquisitions and Takeovers Act of 1975, stated it could not comment on individual foreign investment cases.
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The Takeovers Panel refused to review the company’s request for a ruling on unacceptable circumstances, stating that available evidence suggested “shareholder pressure rather than combining for taking of control.”
In 2023, Australia blocked a Chinese investor from increasing its stake in a rare earths mining company based on Foreign Investment Review Board advice. The review board did not respond to requests for comment regarding the Global Lithium dispute.
Chinese Stake and Strategic Interests
Global Lithium’s top two shareholders, each holding close to 10%, are Australia’s Mineral Resources and Canmax Technologies. Canmax, controlled by Chinese billionaire Pei Zhenhua—who amassed his fortune through battery giant CATL—did not respond to requests for comment, while Mineral Resources declined to comment.
In August, Chinese-born property developer Liaoliang (Leon) Zhu, who controls Sincerity Group and is Global Lithium’s third-largest shareholder, sought to join the board. In a letter to shareholders, he criticized the company’s short-term diversification strategies.
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“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,” Zhu stated on his website.
Through his lawyer, Zhu pointed to the Takeovers Panel’s findings and declined further comment.
If Zhu and Chen were to gain board control, they could potentially overrule Mitchell at a critical juncture, particularly as the company seeks a new sales agreement following the lapse of its ten-year supply deal with Canmax in December.
