Rogue Chinese-linked shareholders in Northern Minerals face a showdown with Federal Treasurer Jim Chalmers after they ignored another order to quit large holdings of shares in the taxpayer-backed rare earths hopeful.

Northern Minerals disclosed on Tuesday that based on its updated share register, the investors ordered by Dr Chalmers six weeks ago to dump a cumulative 17.6 per cent of the company were still sitting on “a majority” of the stock when the July 2 deadline for divestment passed.

It has forwarded the information to the Foreign Investment Review Board “to assist the Treasurer and FIRB in the process of determining compliance” with the May 17 disposal orders.

Dr Chalmers, who has already sued other recalcitrant investors in Northern Minerals, warned he would take action to ensure the divestment orders were met.

“We expect foreign companies investing in Australia to comply with Australia’s laws,” he said on Tuesday.

“We’ll do what’s necessary to protect the national interest and the integrity of our foreign investment framework.”

Australian laws empower the Government to compulsorily acquire shares as long as the affected shareholders are fairly compensated.

May’s divestment order had extended a two-year tug of war between shadowy Chinese investors and Canberra over the strategically sensitive Browns Range rare earths project in WA’s Kimberley, where Northern Minerals is closing in on a development decision.

Browns Range is seen as important in helping break China’s stranglehold on critical minerals by potentially producing rare earth oxides praseodymium, dysprosium, neodymium and terbium, which are in demand for use in electric vehicles, clean energy and the defence sector.

The Albanese Government and other Western countries are taking a much harder line on national interest grounds to limit Chinese investment in a number of targeted metals and minerals.

Browns Range, which would supply rare earths to a refinery being built by Iluka Resources, was one of seven projects named last year to receive Australian and US government backing under a $4.5 billion critical minerals pact signed by Prime Minister Anthony Albanese and US Donald Trump.

China reacted angrily to the May divestment order, urging Australia to “respect the legitimate rights and interests of Chinese investors and provide a fair, transparent and non-discriminatory business environment for foreign investment”.

Northern Minerals suspects the little-known Chinese investors are backed by Beijing and trying to covertly take control of Browns Range.

In 2024, Dr Chalmers ordered five entities thought to be linked to China to sell 613.6 million shares, or 10.4 per cent of Northern Minerals, on national interest grounds.

However, most of the stock is believed to have been sold to allied parties.

One investor, Indian Ocean International Shipping and its sole director were sued by the Treasurer and later fined $14m for defying the order.

The Treasurer again intervened in April to block suspect shareholders from voting their shares to topple the board at Northern Minerals’ annual meeting before ordering Vastness Investment Group, Hong Kong Ying Tak, Real International Resources, Qogir Trading & Service, Chuanyou Cong and Zhongxiong to divest their 1.68 billion shares.