By Melanie Burton
MELBOURNE (Reuters) – Australia’s Global Lithium Resources 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.