Sept. 25 (Bloomberg) -- Lynas Corp. was suspended from trading in Sydney while it seeks funding after Australia blocked China Non-Ferrous Metal Mining (Group) Co. from buying a majority stake in the rare earths company.

The suspension may last five days as it negotiates potential deals, Sydney-based Lynas said in a statement to the Australian stock exchange. “Lynas is well advanced in finalizing interim funding to ensure that the company continues to have adequate working capital,” the company said yesterday.

Australia’s Foreign Investment Review Board yesterday ordered China Non-Ferrous to limit its stake in Lynas to less than 50 percent. China accounts for more than 90 percent of global output of rare earths, used in iPod music players, liquid crystal displays, hybrid cars and wind turbines.

Investments by Chinese companies have faced scrutiny from Australia as the biggest metals consumer accelerates takeovers. Australia blocked a A$2.6 billion ($2.3 billion) bid by state- owned China Minmetals Corp. for OZ Minerals Ltd. in March on national-security concern and review board director Patrick Colmer said yesterday overseas investors should limit proposed stakes in major mining companies to no more than 15 percent.

Before today, Lynas, which says it owns the world’s richest deposit of rare earths, had risen more than threefold from May 1 when China Non-Ferrous agreed May 1 to pay A$252 million for a 51.6 percent stake.

Cash Balance

Lynas had planned to use the money from the sale to resume work on the Mount Weld project, near Laverton in Western Australia. The company suspended work in February while it sought development funding. It has A$7.5 million of cash, it said yesterday.

The review board has processed about 90 proposed Chinese investments in Australia valued at about A$34 billion in the past 18 months, Colmer said yesterday. China is now probably the third-biggest foreign investor in Australia after the U.S. and the U.K., he said, adding it may climb further up the rankings in coming years.

After initially blocking China Minmetal’s offer for OZ Minerals it allowed the sale of most of its other assets to the Chinese company.

To contact the reporter on this story: Rebecca Keenan in Canberra at rkeenan5@bloomberg.net.

Last Updated: September 24, 2009 20:34 EDT