In an unprecedented move, Australian Treasurer Jim Chalmers has launched legal action in the Federal Court against Indian Ocean International Shipping and Service Company Ltd (Indian Ocean), a foreign investor with links to Chinese interests, over alleged breaches of Australia’s foreign investment laws.

The Treasurer announced the proceedings, stating the case is aimed at protecting national security and the integrity of Australia’s foreign investment framework.

Chalmers said that in June 2024 he issued Disposal Orders directing Indian Ocean and four other foreign investors to sell their shares in Northern Minerals Limited (ASX: NTU) — an Australian rare earths company — by September 2024. The orders were made due to concerns over national security risks associated with foreign control of critical minerals.

Chalmers claims Indian Ocean failed to comply with the orders. He is now seeking penalties, declarations, and costs through the court, marking the first time an Australian Treasurer has taken such action in their own name.

“Foreign investors in Australia are required to follow Australian law. We are doing what is necessary to protect the national interest,” Chalmers said in a statement.

Northern Minerals, which produces heavy rare earths crucial for technologies such as electric vehicles and defence applications, responded by noting it is not a party to the proceedings and considers the matter one between the Treasurer and Indian Ocean.

The case puts a spotlight on the Albanese government’s tougher approach to foreign investment, particularly around critical resources. It also signals Canberra’s growing unease with Chinese-linked interests in sensitive industries, as Australia seeks to secure supply chains and shield strategic assets from potential foreign influence.

Court filings will be made available in due course, according to Chalmers.