Speaker 1: Hi, I'm Daniel James and you're listening to seven Am.
Speaker 1: Anthony Albanezi's meeting with Jijing King this week is a
Speaker 1: crucial opportunity to strengthen relations with our biggest trading partner,
Speaker 1: But it comes at a time when Australia is trying
Speaker 1: to break China's grip on the supply chain of critical minerals.
Speaker 1: China's global domination has been in the works for decades,
Speaker 1: a grand plan that gives China ready access to materials
Speaker 1: essential for everything from fighter jets to wind turbines. It
Speaker 1: also gives Beijing extraordinary leverage over Western economies and defense forces.
Speaker 1: Today columnists for Australian Foreign Affairs Ian Verinder on China's
Speaker 1: long game on critical minerals domination from the old pile
Speaker 1: of mining waste in Western Australia which could upend it.
Speaker 1: It's Tuesday and we keep hearing about China's stranglehold over
Speaker 1: the critical mineral supply globally. How did that happen? Can
Speaker 1: you take me back to where this story began for them? Look,
Speaker 1: it began.
Speaker 2: Way back, you know, more than thirty years ago, really,
Speaker 2: And I guess the first inkling that we had that
Speaker 2: this was about to take place was a speech that
Speaker 2: Den Jhaping gave in around nineteen ninety two on a
Speaker 2: tour of China.
Speaker 3: At this crucial point in China's reform and opening up,
Speaker 3: Dong Chaoping once again demonstrated that he possessed the political
Speaker 3: courage and wisdom needed to guide China along the right path.
Speaker 2: He was never the president, but he was really the
Speaker 2: leader of China at the time, and he made this
Speaker 2: announcement at a gathering where he said, the Middle East
Speaker 2: has oil, China has rare earths.
Speaker 3: His comments were a declaration that projected China's reform and
Speaker 3: opening up into a new era and once again placed
Speaker 3: China onto the fast track of development.
Speaker 2: And from that point on, China went down this path
Speaker 2: of exploiting the rarests that it had, which was a
Speaker 2: fairly fast sighted kind of vision for Den, because you know,
Speaker 2: rare earths aren't really all at rare. They're scattered right
Speaker 2: across the Earth's crust, but they're not usually a needing
Speaker 2: form of concentrated way to extract easily. So you know,
Speaker 2: mining becomes economic when you've got large quantities enriched like
Speaker 2: gold ores or something like that. Whereas rare earths are
Speaker 2: just scattered in very very minute quantities across a broad range,
Speaker 2: so they're very difficult to mine economically, and then when
Speaker 2: it comes to the processing of it, it becomes a
Speaker 2: really dirty, difficult tasks. They often run alongside things like
Speaker 2: uranium and thorium, which are really quite toxic things to
Speaker 2: mine with. So it was an incredible, I guess, vision
Speaker 2: to be able to see this and to take advantage
Speaker 2: of it to the extent that they've really become absolutely
Speaker 2: vital to the modern economy. So the Deng saw that
Speaker 2: China had an advantage with rare earths in China, but
Speaker 2: what he did was he then insisted that they not
Speaker 2: just extract, but they refine and manufacture using those goods
Speaker 2: as well.
Speaker 1: So they not only have the minerals, they also have
Speaker 1: recognized the power in dominating the processing of those minerals.
Speaker 1: So how did they go about monopolizing that.
Speaker 2: The state has not held back in ensuring that it
Speaker 2: retains its dominant position, and they've dominated by really quite
Speaker 2: overt use of strategies where they they really tend to
Speaker 2: manipulate market prices, put all kinds of stress and strains
Speaker 2: on competitors, usually through market forces and also by running
Speaker 2: propaganda campaigns as well. There's a good example. America really
Speaker 2: only had one rare earth's mind. It shut down I
Speaker 2: think round about the eighties eye as it was reopened
Speaker 2: round about twenty ten, a company called Molly Corp decided
Speaker 2: to reopen it. Rare earth prices at that stage were
Speaker 2: really very strong. Let's find out what's ahead for Maleycorp
Speaker 2: and the rare earth metals market. We have Mark Smith.
Speaker 2: He is Maleykorp's chief executive.
Speaker 1: Mark, thanks so much for coming in.
Speaker 2: Good to see you. Finally, by twenty fourteen, Mollycorp had
Speaker 2: gone broke and was forced to shut down. Do you
Speaker 2: believe that prices are being manipulated by Chinese producers? The
Speaker 2: market was suddenly flooded with all kinds of rare earths,
Speaker 2: and so Molecorp just could not compete against this.
Speaker 4: Chinese producers have been very clear about two things. They're
Speaker 4: going to get continue to restrict the export of these
Speaker 4: materials to the rest of the world, and we can
Speaker 4: expect an irreversible trend, as they call it, for higher prices.
Speaker 2: The mine has since reopened, by the way, but it
Speaker 2: just goes to show that the extent of the power
Speaker 2: that China was exerting. Then a few Australian companies have
Speaker 2: come under pressure as well. An Australian company called Linus
Speaker 2: opened to an operation in Malaysia. Suddenly there was a
Speaker 2: propaganda campaign running right through that area of Malaysia talking
Speaker 2: about the environmental impacts of the refining process, and it
Speaker 2: turns out that it was being run by a Chinese
Speaker 2: group called dragon Bridge. This whole propaganda campaign, which incidentally
Speaker 2: has been running another propaganda campaign against Linus with its
Speaker 2: proposed refining operation in America at the moment. But it
Speaker 2: just goes to show that the pressure that China exerts
Speaker 2: is firstly against any competitors and then take retaliatory action
Speaker 2: against any country or any company that threatens its future
Speaker 2: well being. You've seen it in lithium. Lithium prices have
Speaker 2: collapsed in the past eighteen months. You've seen it in nickel.
Speaker 2: Nickel prices have crashed. China has basically exercised its power
Speaker 2: with nickel by pouring vast amounts of money into Indonesia.
Speaker 2: Indonesia ten years ago provided around about six percent of
Speaker 2: the world's refined nickel and now provides around six percent,
Speaker 2: So that's just in a decade, and as a result
Speaker 2: Australia's nickel operations have shut down. I mean Andrew Forrest,
Speaker 2: who you know, the person behind Fortescue, who's one of
Speaker 2: Australia's biggest iron ore miners, spent around three quarters of
Speaker 2: a billion dollars just two and a half three years
Speaker 2: ago to buy a whole lot of nickel operations in
Speaker 2: the West and was forced to close them within a year.
Speaker 1: So as it stands in China has succeeded in fulfilling
Speaker 1: ben Jaoping's vision beyond beyond what he could have even imagined.
Speaker 1: So how would you describe China's position when it comes
Speaker 1: to critical minerals right now?
Speaker 2: Lookause, it's absolutely dominant in the space of critical minerals.
Speaker 2: And the domination depends on what part of the rare
Speaker 2: earth spectrum you're talking about. I think it's anything from
Speaker 2: about seventy percent from the lower end of the rare
Speaker 2: earth spectrum up to total domination one hundred percent when
Speaker 2: you get what's known as heavy rare earths, so it's
Speaker 2: a what's known as a monopsony. It's the big player
Speaker 2: it's the elephant in the room when it comes to
Speaker 2: this industry.
Speaker 1: Coming up after the break, How a pile of mining
Speaker 1: waste in Western Australia could hold the key to upbending
Speaker 1: China's stranglehold of the rare earth industry. And why does
Speaker 1: it matter if China dominates the rare earth supply chain?
Speaker 1: How does that affect us?
Speaker 2: Well, I mean it'll be not just to Australia's advantage,
Speaker 2: but to the world's advantage if they're an alternative source,
Speaker 2: you know. I mean, at the moment, we're seeing all
Speaker 2: these negotiations take place between America and China over trade
Speaker 2: and over a range of other areas. What people don't
Speaker 2: realize is that America's defense, and particularly it's aerial defense,
Speaker 2: the flagship of the defense Fleet, the FA thirty fives,
Speaker 2: require huge amounts of these magnets that China manufactures out
Speaker 2: of rare earths that only it produces, you know, refined
Speaker 2: rare earths. So America's defense is largely dependent upon getting
Speaker 2: these components from China. So if there was ever any
Speaker 2: kind of conflict between America and China, China really does
Speaker 2: send to hold the whipan.
Speaker 1: And you've been reporting on how Australia was trying to
Speaker 1: shore up its own supply chains. Can you tell me
Speaker 1: about what's been happening in our back western Australia.
Speaker 2: Yeah, look about about thirty years ago as a company
Speaker 2: called Aluka. It actually had a different name back then,
Speaker 2: but it was a sand miner essentially, and it was
Speaker 2: basically getting mineral sands refining them and one of the
Speaker 2: byproducts was I think called monozite, which contains rare earths,
Speaker 2: and there was a market for it back then and
Speaker 2: it was being used i think for fluorescent lights. Suddenly
Speaker 2: that market collapsed and nobody knows that I look at
Speaker 2: these days who was responsible for it? But someone with
Speaker 2: a lot of foresight decided that rather than just dump
Speaker 2: all this stuff, they would store it. So they did
Speaker 2: this huge pit and started storing all this monozite. But
Speaker 2: what's happening there now is that it's building a refinery
Speaker 2: that will be capable of refining not just ordinary rear earth,
Speaker 2: but what's known as heavy rare earths, which are very
Speaker 2: difficult to obtain, elements that are required for super high
Speaker 2: end uses in wind turbines, in aviation, and particularly in
Speaker 2: defense purposes as well. And so here we have this
Speaker 2: Australian company which is now going to have a refinery
Speaker 2: which will the only refinery outside of China that can
Speaker 2: produce this kind of stuff. In the past few weeks,
Speaker 2: in fact, Linus, the other Australian company, has announced that
Speaker 2: it is also trying to upgrade its refining processes. Possibly
Speaker 2: they've got a couple of little operations in Western Australia
Speaker 2: and the big one in Malaysia as well, so it
Speaker 2: looks like they're going to try and be beat. I
Speaker 2: look it to the punch to seeing who can be
Speaker 2: the first refiner outside of China to be able to
Speaker 2: compete with the Chinese. Will provide the Western world with
Speaker 2: an alternative source. So we will be providing for the
Speaker 2: world for the first time a competitive source and an
Speaker 2: alternative source of these really valuable minerals.
Speaker 1: So there's clearly advantages to Australia being a bigger player
Speaker 1: in the critical mineral space. We know that both Morrison
Speaker 1: and Alberanezi governments has been billions backing the Luke and Mine,
Speaker 1: So what does it say about how our governments thinking
Speaker 1: about this industry.
Speaker 5: We can't just sit back and allow ourselves to be
Speaker 5: at the end to global supply chains. We need to
Speaker 5: put it simply, we need to make more stuff here.
Speaker 1: That simple.
Speaker 2: So the other and easy government in recent times has
Speaker 2: suggested a kind of reserve of these minerals that the
Speaker 2: government would stand behind it the industry and buy up
Speaker 2: these reserves when the price was low.
Speaker 5: We have some of the world's largest reserves of critical minerals,
Speaker 5: and the new strategy will set a vision for the sector.
Speaker 2: And there are some people in the industry who think
Speaker 2: that's a great idea. The chief executive of Linus she
Speaker 2: thought that it wasn't a terrific guide here at all,
Speaker 2: because I think she considered that this might primp profits
Speaker 2: at some stage. But the economic benefit is vast. Let's
Speaker 2: not kid ourselves there, and so there's an economic incentive
Speaker 2: to maintain that power. But the geopolitical advantage of having
Speaker 2: domination over some of these things, there's just difficult to
Speaker 2: imagine just how significant that is. Because if you have
Speaker 2: domination over the components that are required for defense situations, well,
Speaker 2: that puts you in an extraordinarily powerful political position as well,
Speaker 2: particularly when it comes to negotiating well anything from trade
Speaker 2: to defense packs to where you'd think you might be
Speaker 2: in the world pecking order.
Speaker 1: And fascinating stuff. Thank you so much for your time, pleasure.
Speaker 1: Also in the news, Jim Chalmers says he's pretty relaxed
Speaker 1: following the accidental release of advice given to him by
Speaker 1: Treasury which advised him to raise taxes and which cast
Speaker 1: out on his government's ability to meet their housing targets.
Speaker 1: The Treasury conceded the government is not on track to
Speaker 1: build one point two million homes over the next five years,
Speaker 1: so this doesn't mean they can't cause correct over the
Speaker 1: next four years to meet their target. And lawyers for
Speaker 1: former Greens candidate Hannah Thomas claims she was punched in
Speaker 1: the face by police during an arrest at a pro
Speaker 1: Palestinian protest in Sydney. Her lawyers say there is body
Speaker 1: worn camera footage showing the violent arrest, which they say
Speaker 1: resulted in extensive and serious injuries to her eye and
Speaker 1: it's required two rounds of surgery. The thirty five year
Speaker 1: old is suing the State of New South Wales and
Speaker 1: asking for charges against her to be withdrawn. I'm Daniel James.
Speaker 1: This is seven AM. Thanks for listening.