CRITICAL MINERALSEven Out of China’s Hands, Mines Still Rely on Its Equipment
The landmark critical minerals agreement between Australia and the United States is vital to both nations’ security and sovereignty. But the agreement signed carries an inherent vulnerability. The very partnership designed to reduce China’s coercive leverage is increasingly relying on Chinese technology to give effect to its objectives.
The landmark critical minerals agreement between Australia and the United States is vital to both nations’ security and sovereignty. Like AUKUS, it is about competing with China.
But to enable it we now need also to look beyond building mines and processing. This is because the agreement signed carries an inherent vulnerability. The very partnership designed to reduce China’s coercive leverage is increasingly relying on Chinese technology to give effect to its objectives.
This issue extends across the minerals industry, not just rare earths. The challenge is ensuring the operational technologies that enable extraction, refining and manufacturing are sufficiently diversified and secured.
Big deals with China by Australian companies BHP and Fortescue are examples of how mining companies outside China are becoming increasingly dependent on it.
The critical minerals agreement signed on 20 October committed to intensifying cooperative efforts in securing supply of these materials that are essential for the modern economy, especially in the energy transition, and for defense technology. Australia and the US also said they would deter asset sales in the industry, presumably including deposits.
As an exercise in state strategy, China has maneuvered into a powerful position in supply of critical minerals. In the case of one category, rare earths, it has made itself dominant, and in October it showed just what it could do with that dominance. It said it would require even foreign companies using such materials sourced from China to get a Chinese export license for final products.
Its aim was to reveal such leverage that other nations would accept that compliance, not competition, with China was the only viable approach.
That misuse of market power, ahead of a 20 October meeting between President Donald Trump and Prime Minister Anthony Albanese, and Trump’s meeting with President Xi Jinping on 30 October, continued Beijing’s approach of military assertiveness and economic coercion to pressure nations into choices that advance China’s strategic objectives at the expense of their own interests.
Last month we also saw it threaten retaliation unless Britain let it build a mega embassy in London, and there’s been bullying of the Netherlands in relation to the intellectual property of tech company Nexperia, aggression against the Philippines and Taiwan, and yet another unsafe release of flares by Chinese aircraft against an Australian plane in the South China Sea.
This shows that every new dependency—no matter how commercially attractive initially—risks increasing strategic vulnerability.
