Northern Minerals is vying to challenge China's dominance of dysprosium production, a rare earth mineral that is used to make high-performance magnets used in electric vehicles.

Chinese investors have in recent years sought to take sizeable positions in the Australia-based firm.

Canberra used foreign takeover laws in 2024 to force some of these investors to sell their shares in the company.

Treasurer Jim Chalmers said another string of Chinese companies would be forced to bail out of Northern Minerals.

"We operate a robust and non-discriminatory foreign investment framework and will take further action if required to protect our national interest in relation to this matter," he said in a statement.

Six Northern Minerals shareholders were listed on the disposal order.

Three of those shareholders had China addresses, two had Hong Kong addresses, and one was listed in the British Virgin Islands.