CRITICAL MINERALSChina’s Control and Coercion in Critical Minerals
Markets for critical minerals are no longer shaping up to be the next components of the global economy to be dominated by China. They already are. While Western nations were sleeping, China built vertically integrated supply chains for several critical minerals vital to the energy transition and high technology applications, including defense equipment.
Markets for critical minerals are no longer shaping up to be the next components of the global economy to be dominated by China. They already are.
While Western nations were sleeping, China built vertically integrated supply chains for several critical minerals vital to the energy transition and high technology applications, including defense equipment.
Critical mineral supply chains are increasingly subject to Chinese government manipulation focused on creating and maintaining monopolies and monopsonies. The scale and scope of this competition is presenting Australia and its partners with significant economic and security challenges. The Australian government’s 2 June divestment order to China-linked entities with shareholdings in rare earths developer Northern Minerals is an example of what will be needed to counter China’s domination of critical minerals supply.
Stricter foreign investment oversight may mitigate some of the more egregious attempts to grab control of minerals projects in Australia. Meanwhile, various coercive behaviors are directly affecting Australian mining interests at home and abroad and threatening growth of more diverse, secure and sustainable critical mineral supply chains. Several recent developments have highlighted the growing intensity of these threats.
The situation is becoming acute in several countries in resource-rich Africa, where Australian companies contributed 29 percent of the continent’s exploration spending for all minerals in 2023. (Canadian companies contributed another 29 percent.) Russia-influenced deterioration of security in several mineral-rich African nations is supporting China’s aspirations.
Two Australian companies, operators of world-scale lithium properties that are being developed into mines in the Democratic Republic of the Congo (DRC) and Mali, have been edged out by China-based joint-venture partners amid disputes with national governments, plummeting share prices and suspensions from the ASX. Control of the resources will consolidate China’s role as effectively the world’s central banker for lithium: it already controls around 80 percent of processing and an increasing share of global mine production.
The DRC property is the Manono Project, which has the largest hard-rock lithium resource in the world. A dispute with China’s Zijin Mining Group over the project’s ownership has resulted in Australia’s AVZ Minerals being delisted from the Australian Stock Exchange. AVZ said in September it believed China and Congolese companies, including state-owned Cominiere, were ‘acting in concert to crystalize disputes with AVZ and disrupt and delay the development of the Manono Project with the aim of seizing control’.
