South Pacific: Australia and the Global Critical Minerals Race
Mathew Schwartz
Australia has long held vast reserves of coal and iron ore, resources that were critical to the heavy industries of the Second Industrial Revolution and remain vital to the global economy today. Yet, an international race of competitive economies seeking to take the lead in the fourth industrial revolution is underway. The speed of innovation and advancement in technology is unprecedented. Developments in artificial intelligence, quantum computing, green technology, and biological manufacturing have demonstrated the extent of this technological epoch. The story begins with critical minerals and rare earths.
This global race for critical minerals sits at the intersection of geopolitics, climate policies aimed at net-zero goals, and market competition. Australia's strategic stake in this race is vital to its economic and national security outlook. Australia has the potential to carve a path forward of responsible and ethical leadership, deepen ties with the industrial heartland of Asia and facilitate new domestic industries and technological capability to leverage its resources.
A Material World of Techno-Nationalism
Policies are the first step, but securing raw materials is essential for the next phase of this global journey. Dr John Coyne from the Australian Strategic Policy Institute defined a critical mineral as “a metallic or non-metallic element that is essential for modern technologies, economies, or national security and that has a supply chain at risk of disruption”.
China’s dominance of the critical minerals supply chain is unprecedented, allowing for a monopolisation of critical minerals including gallium, germanium, and antimony. These materials are required to produce technology from solar panels to complex defence systems. Modern Treatise journalist Ben Smith wrote an article examining China’s advancement into deep-sea mining for raw materials including cobalt, magnesium, nickel and copper. Beijing’s alignment of economic dominance and security interests of Ocean floor mining was ratified under the 2015 National Security Law, claiming the ocean was the new strategic frontier to preserve its security.
Likewise, Washington has sought a greater stake in the supply chain of critical minerals and rare earths, acknowledging the vulnerability of present supply chains. The first Trump administration began an extensive process of decoupling from the Chinese economy. The Biden administration doubled down on the importance of critical minerals to advance technology, industry and modern economies. Legislation such as the CHIPs and Science Act sought to incentivise growth into a sovereign semiconductor industry with an investment of $52 billion. Additionally, reviews into the US Critical Mineral and Material Supply Chain reported: “an overreliance on adversarial countries posed a threat to national and economic security”. Just recently, President Trump signed Executive Order 'Unleashing American Energy' with Section 2B outlining America’s objective to become a leading producer of rare earth minerals. The bipartisanship on this across the Trump-Biden-Trump administrations demonstrates this material world is the new status quo. For many, "the great tech decoupling," driven by techno-nationalism and hegemonic ambitions, will shape the global economic and security landscape, including Oceania, for the foreseeable future.
Australia’s Strategic Position in the Global Race
For many in the global economy, Australia is viewed as a resource heartland that is vital to the global race. The Albanese Government's policies, including Future Made in Australia, aim to position Australia in the critical minerals supply chain by offering a 10% tax offset for processing and refining costs. Through diplomatic multilateralism and dialogue with partner nations across AUKUS, QUAD and the Mineral Security Partnership, Australia can raise the capital to facilitate new trade relationships. Crucially, Australia would need to leverage its pre-existing relationship with the Trump administration and incentivise investment and worth by proving Australia is not only a close and trusted friend but a strategic ally.
According to estimates by CSIRO, the critical minerals market will double or quadruple by 2030. Moreover, the alignment between the Government and the Private Sector has positioned Australia beyond Oceania. Mining operations across continental Africa have resulted in 170 mines operating across 35 countries. Australian High Commissioner to Ghana, Berenice Owen-Jones, advocates for Australian embassies to promote Environmental, Social, and Governance (ESG) principles among governments and local communities, ensuring ethical mining practices. Horrific accounts of the cobalt supply chain in the Democratic Republic of Congo have led to the revelations of child labour and exploitation
Australia as a leader in mining governance could increase diplomatic relations, provide new avenues of supply and deliver actionable solutions to the concerns of environmental degradation and the human toll following large-scale mining activities. Leveraging Pillar II of AUKUS as a platform for technological and defence development will require the investment of Future Made in Australia, and other large-scale industrial policies combined with diplomatic prowess. Secretary of State, Marco Rubio, associated AUKUS as a ‘blueprint’ with emphasis on the critical minerals realm. Ian Satchwell argues the Australian supply chain would need to invest in the production and processing of minerals to meet the demand. Thereby, creating new jobs and Industry outside of the Asian economy.
The Role of Regional and Global Partnerships
Beyond traditional partnerships with Washington, Australia’s relationships with the industrial heartland of the Indo-Pacific, the Republic of Korea and Japan are vital to the race. An ASPI study on Australia leveraging its prowess in mining critical minerals to bolster bipartisan trade relations with South Korea as an advanced manufacturing economy is a new development. According to the study, both countries are middle powers that would be directly impacted by the techno-nationalist policies of China and America. By leveraging the Minerals Security Partnership and the Chip4 Alliance program, each country would strengthen its existing expertise allowing for greater market competitiveness in the development of new technology.
Australia Opportunities and Limitations
In the words of former Foreign Minister, Gareth Evans, Australia is a good international citizen, and it is in the national interest to maintain the status quo as a respected middle power both regionally and internationally. As mentioned previously, Australia’s mining booms have been a result of international demand and Australia being a respected trade partner of choice. The opportunities presented in the global critical minerals race for strengthened bilateral and multilateral trade are in the national interests. Furthermore, Australia’s emphasis on good mining governance abroad through the implementation of ESG frameworks has allowed for deepened economic and diplomatic ties with 35 countries across Africa.
Australian policy choices must be measured and responsible to ensure local investment. The economic outlook of potential market volatility by the techno-nationalist policies of Beijing and Washington is justification for middle powers to buffer supply chains. The mining boom of potential record-high prices of Lithium, Cobalt and Manganese is to be taken advantage of to further invest in the Australian economy. The greatest risk for the Australian economy is a lack of investment towards bolstering technological and industrial capacity. Previous mining booms have failed to secure re-investment to facilitate a diverse and productive economy.
