Chalmers hits China-linked companies with landmark lawsuit over crucial military minerals

Treasurer Jim Chalmers has launched an unprecedented lawsuit against China-linked interests to force them to sell their stake in an Australian rare earths miner, whose products are crucial to warplanes, missiles and submarines.

The lawsuit, filed in the Federal Court on Thursday against foreign investors in Northern Minerals, is also seeking financial penalties for allegedly refusing to obey Chalmers’ direction to sell out of the company last year.

Federal Treasurer Jim Chalmers has launched legal action to tackle Chinese influence over Australian mining companies. Credit: AAP

The Australian-listed company is developing the Browns Range heavy rare earths project in remote northern Western Australia, which could be one of the first non-Chinese sources of the minerals used in military guidance systems, wind turbines and electric vehicles.

Chalmers’ court action against an entity called Indian Ocean International Shipping and Service Company Ltd and a former associate follows his order last year for five Chinese-linked groups to sell their shares in Northern Minerals to unconnected buyers by September.

“Foreign investors in Australia are required to follow Australian law,” Chalmers said in a statement. “We are doing what is necessary to protect the national interest and the integrity of our foreign investment framework.”

China’s control of rare earths and critical products is an escalating cause of concern to the United States and countries like Australia, after Donald Trump’s trade war prompted Beijing to restrict shipments of the materials. It has made similar moves before, including against Japan in 2010 during a territorial dispute.

China controls nearly all of the world’s heavy rare earth production and Australian Strategic Policy Institute senior fellow Ian Satchwell said the global superpower’s interests were seeking to exert influence over Northern Minerals.

“Australia, with like-minded partner nations, is seeking to build alternative supply chains for rare earths and other critical minerals, and the Northern Minerals shenanigans are a very obvious example of China-linked bad faith investing to allegedly seek to disrupt those efforts,” Satchwell said.

“In Australia’s case those rare earths are used for things such as F35 fighters, missiles attached to them and in the future, nuclear-powered submarines.”

The federal government has warned that Australian critical minerals companies are a target for foreign actors trying to gain a commercial and strategic advantage. “The sector’s geostrategic importance places it at particular risk of foreign interference that aims to disrupt Australia’s efforts to diversify global supply chains and build onshore capabilities,” it advises companies.

Northern Minerals chairman Adam Handley said the company noted the lawsuit. “Northern Minerals is not a party to these proceedings and considers this a matter between the treasurer and Indian Ocean,” he said.

The US has been trying to cut its reliance on China’s supply of minerals. Trump has floated the prospect of deals with Greenland and Ukraine.

Australia has some of the biggest known reserves of rare earths and many critical minerals, like lithium, and the government has sought to use the nation’s rich critical minerals supply as a sweetener to gain an exemption from Trump’s tariffs.

Chalmers said he strengthened protections for the national interest in his reforms to foreign investment laws in May 2024, and this was the first time a treasurer had brought a case to the Federal Court over an alleged breach.

China has spent decades strategically investing to dominate the global supply of minerals that are crucial to building the clean technologies that are now needed to decarbonise the world’s economy, such as batteries, wind farms and solar panels.

China regulates prices and the availability of key minerals to crush competition, and reduces or boosts supply via four state-owned companies that control its entire industry.

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