WEBVTT - How China took over the world’s critical minerals 0:00:01.440 --> 0:00:10.640 Hi, I'm Daniel James and you're listening to seven Am. 0:00:10.800 --> 0:00:14.160 Anthony Albanezi's meeting with Jijing King this week is a 0:00:14.200 --> 0:00:17.720 crucial opportunity to strengthen relations with our biggest trading partner, 0:00:18.440 --> 0:00:20.360 But it comes at a time when Australia is trying 0:00:20.360 --> 0:00:23.640 to break China's grip on the supply chain of critical minerals. 0:00:24.560 --> 0:00:27.320 China's global domination has been in the works for decades, 0:00:27.920 --> 0:00:30.920 a grand plan that gives China ready access to materials 0:00:31.080 --> 0:00:35.720 essential for everything from fighter jets to wind turbines. It 0:00:35.760 --> 0:00:40.680 also gives Beijing extraordinary leverage over Western economies and defense forces. 0:00:41.920 --> 0:00:46.800 Today columnists for Australian Foreign Affairs Ian Verinder on China's 0:00:46.840 --> 0:00:49.960 long game on critical minerals domination from the old pile 0:00:50.000 --> 0:00:58.720 of mining waste in Western Australia which could upend it. 0:00:58.720 --> 0:01:08.000 It's Tuesday and we keep hearing about China's stranglehold over 0:01:08.240 --> 0:01:11.920 the critical mineral supply globally. How did that happen? Can 0:01:11.959 --> 0:01:16.520 you take me back to where this story began for them? Look, 0:01:16.560 --> 0:01:17.480 it began. 0:01:17.600 --> 0:01:20.199 Way back, you know, more than thirty years ago, really, 0:01:20.240 --> 0:01:22.679 And I guess the first inkling that we had that 0:01:23.000 --> 0:01:25.920 this was about to take place was a speech that 0:01:26.040 --> 0:01:29.720 Den Jhaping gave in around nineteen ninety two on a 0:01:29.800 --> 0:01:33.280 tour of China. 0:01:33.840 --> 0:01:36.840 At this crucial point in China's reform and opening up, 0:01:37.240 --> 0:01:41.000 Dong Chaoping once again demonstrated that he possessed the political 0:01:41.040 --> 0:01:44.760 courage and wisdom needed to guide China along the right path. 0:01:46.000 --> 0:01:48.760 He was never the president, but he was really the 0:01:48.840 --> 0:01:51.280 leader of China at the time, and he made this 0:01:51.320 --> 0:01:54.559 announcement at a gathering where he said, the Middle East 0:01:54.560 --> 0:01:57.080 has oil, China has rare earths. 0:01:58.160 --> 0:02:01.840 His comments were a declaration that projected China's reform and 0:02:01.960 --> 0:02:05.280 opening up into a new era and once again placed 0:02:05.360 --> 0:02:08.440 China onto the fast track of development. 0:02:12.919 --> 0:02:15.960 And from that point on, China went down this path 0:02:16.160 --> 0:02:20.080 of exploiting the rarests that it had, which was a 0:02:20.080 --> 0:02:24.680 fairly fast sighted kind of vision for Den, because you know, 0:02:24.760 --> 0:02:28.360 rare earths aren't really all at rare. They're scattered right 0:02:28.400 --> 0:02:32.440 across the Earth's crust, but they're not usually a needing 0:02:32.480 --> 0:02:37.440 form of concentrated way to extract easily. So you know, 0:02:38.080 --> 0:02:43.600 mining becomes economic when you've got large quantities enriched like 0:02:43.680 --> 0:02:47.280 gold ores or something like that. Whereas rare earths are 0:02:47.320 --> 0:02:51.600 just scattered in very very minute quantities across a broad range, 0:02:51.760 --> 0:02:55.440 so they're very difficult to mine economically, and then when 0:02:55.480 --> 0:02:58.320 it comes to the processing of it, it becomes a 0:02:58.440 --> 0:03:03.120 really dirty, difficult tasks. They often run alongside things like 0:03:03.280 --> 0:03:06.920 uranium and thorium, which are really quite toxic things to 0:03:06.960 --> 0:03:11.680 mine with. So it was an incredible, I guess, vision 0:03:11.760 --> 0:03:14.600 to be able to see this and to take advantage 0:03:14.639 --> 0:03:18.480 of it to the extent that they've really become absolutely 0:03:18.560 --> 0:03:21.960 vital to the modern economy. So the Deng saw that 0:03:22.080 --> 0:03:26.240 China had an advantage with rare earths in China, but 0:03:26.320 --> 0:03:29.240 what he did was he then insisted that they not 0:03:29.480 --> 0:03:35.040 just extract, but they refine and manufacture using those goods 0:03:35.080 --> 0:03:35.440 as well. 0:03:36.000 --> 0:03:38.920 So they not only have the minerals, they also have 0:03:39.000 --> 0:03:42.640 recognized the power in dominating the processing of those minerals. 0:03:43.040 --> 0:03:44.880 So how did they go about monopolizing that. 0:03:45.240 --> 0:03:48.440 The state has not held back in ensuring that it 0:03:48.480 --> 0:03:53.520 retains its dominant position, and they've dominated by really quite 0:03:53.840 --> 0:04:00.040 overt use of strategies where they they really tend to 0:04:00.080 --> 0:04:05.600 manipulate market prices, put all kinds of stress and strains 0:04:05.680 --> 0:04:10.480 on competitors, usually through market forces and also by running 0:04:10.560 --> 0:04:15.440 propaganda campaigns as well. There's a good example. America really 0:04:15.440 --> 0:04:18.640 only had one rare earth's mind. It shut down I 0:04:18.640 --> 0:04:21.320 think round about the eighties eye as it was reopened 0:04:21.839 --> 0:04:25.320 round about twenty ten, a company called Molly Corp decided 0:04:25.360 --> 0:04:28.279 to reopen it. Rare earth prices at that stage were 0:04:28.320 --> 0:04:30.920 really very strong. Let's find out what's ahead for Maleycorp 0:04:31.000 --> 0:04:33.400 and the rare earth metals market. We have Mark Smith. 0:04:33.440 --> 0:04:35.479 He is Maleykorp's chief executive. 0:04:35.680 --> 0:04:37.040 Mark, thanks so much for coming in. 0:04:37.080 --> 0:04:41.120 Good to see you. Finally, by twenty fourteen, Mollycorp had 0:04:41.160 --> 0:04:44.320 gone broke and was forced to shut down. Do you 0:04:44.400 --> 0:04:49.200 believe that prices are being manipulated by Chinese producers? The 0:04:49.279 --> 0:04:52.760 market was suddenly flooded with all kinds of rare earths, 0:04:53.200 --> 0:04:56.200 and so Molecorp just could not compete against this. 0:04:56.400 --> 0:04:59.560 Chinese producers have been very clear about two things. They're 0:04:59.600 --> 0:05:02.120 going to get continue to restrict the export of these 0:05:02.160 --> 0:05:04.440 materials to the rest of the world, and we can 0:05:04.520 --> 0:05:08.599 expect an irreversible trend, as they call it, for higher prices. 0:05:08.880 --> 0:05:11.400 The mine has since reopened, by the way, but it 0:05:11.480 --> 0:05:13.719 just goes to show that the extent of the power 0:05:14.040 --> 0:05:19.880 that China was exerting. Then a few Australian companies have 0:05:19.960 --> 0:05:24.680 come under pressure as well. An Australian company called Linus 0:05:25.400 --> 0:05:28.919 opened to an operation in Malaysia. Suddenly there was a 0:05:28.920 --> 0:05:33.240 propaganda campaign running right through that area of Malaysia talking 0:05:33.240 --> 0:05:37.440 about the environmental impacts of the refining process, and it 0:05:37.520 --> 0:05:40.760 turns out that it was being run by a Chinese 0:05:41.120 --> 0:05:45.720 group called dragon Bridge. This whole propaganda campaign, which incidentally 0:05:45.720 --> 0:05:49.320 has been running another propaganda campaign against Linus with its 0:05:49.600 --> 0:05:53.640 proposed refining operation in America at the moment. But it 0:05:53.720 --> 0:05:57.160 just goes to show that the pressure that China exerts 0:05:57.440 --> 0:06:01.240 is firstly against any competitors and then take retaliatory action 0:06:01.360 --> 0:06:05.200 against any country or any company that threatens its future 0:06:05.240 --> 0:06:08.800 well being. You've seen it in lithium. Lithium prices have 0:06:08.880 --> 0:06:12.520 collapsed in the past eighteen months. You've seen it in nickel. 0:06:13.080 --> 0:06:17.880 Nickel prices have crashed. China has basically exercised its power 0:06:17.920 --> 0:06:22.600 with nickel by pouring vast amounts of money into Indonesia. 0:06:23.080 --> 0:06:27.080 Indonesia ten years ago provided around about six percent of 0:06:27.160 --> 0:06:30.520 the world's refined nickel and now provides around six percent, 0:06:30.600 --> 0:06:33.200 So that's just in a decade, and as a result 0:06:33.279 --> 0:06:37.360 Australia's nickel operations have shut down. I mean Andrew Forrest, 0:06:37.400 --> 0:06:40.720 who you know, the person behind Fortescue, who's one of 0:06:40.760 --> 0:06:44.560 Australia's biggest iron ore miners, spent around three quarters of 0:06:44.560 --> 0:06:46.640 a billion dollars just two and a half three years 0:06:46.680 --> 0:06:49.440 ago to buy a whole lot of nickel operations in 0:06:49.480 --> 0:06:52.960 the West and was forced to close them within a year. 0:06:53.600 --> 0:06:56.919 So as it stands in China has succeeded in fulfilling 0:06:56.960 --> 0:07:01.760 ben Jaoping's vision beyond beyond what he could have even imagined. 0:07:01.800 --> 0:07:04.240 So how would you describe China's position when it comes 0:07:04.279 --> 0:07:05.919 to critical minerals right now? 0:07:06.400 --> 0:07:09.800 Lookause, it's absolutely dominant in the space of critical minerals. 0:07:10.240 --> 0:07:13.040 And the domination depends on what part of the rare 0:07:13.040 --> 0:07:15.880 earth spectrum you're talking about. I think it's anything from 0:07:15.920 --> 0:07:18.600 about seventy percent from the lower end of the rare 0:07:18.640 --> 0:07:21.640 earth spectrum up to total domination one hundred percent when 0:07:21.680 --> 0:07:24.760 you get what's known as heavy rare earths, so it's 0:07:24.760 --> 0:07:28.000 a what's known as a monopsony. It's the big player 0:07:28.040 --> 0:07:29.880 it's the elephant in the room when it comes to 0:07:30.640 --> 0:07:35.680 this industry. 0:07:34.280 --> 0:07:37.160 Coming up after the break, How a pile of mining 0:07:37.200 --> 0:07:40.360 waste in Western Australia could hold the key to upbending 0:07:40.440 --> 0:07:50.960 China's stranglehold of the rare earth industry. And why does 0:07:51.000 --> 0:07:53.920 it matter if China dominates the rare earth supply chain? 0:07:54.280 --> 0:07:55.400 How does that affect us? 0:07:55.640 --> 0:07:58.679 Well, I mean it'll be not just to Australia's advantage, 0:07:58.680 --> 0:08:01.160 but to the world's advantage if they're an alternative source, 0:08:01.640 --> 0:08:03.440 you know. I mean, at the moment, we're seeing all 0:08:03.480 --> 0:08:07.680 these negotiations take place between America and China over trade 0:08:07.760 --> 0:08:11.160 and over a range of other areas. What people don't 0:08:11.200 --> 0:08:15.160 realize is that America's defense, and particularly it's aerial defense, 0:08:16.400 --> 0:08:20.320 the flagship of the defense Fleet, the FA thirty fives, 0:08:20.440 --> 0:08:25.160 require huge amounts of these magnets that China manufactures out 0:08:25.200 --> 0:08:29.280 of rare earths that only it produces, you know, refined 0:08:29.360 --> 0:08:33.720 rare earths. So America's defense is largely dependent upon getting 0:08:33.760 --> 0:08:36.800 these components from China. So if there was ever any 0:08:36.880 --> 0:08:40.280 kind of conflict between America and China, China really does 0:08:40.320 --> 0:08:41.840 send to hold the whipan. 0:08:41.840 --> 0:08:44.120 And you've been reporting on how Australia was trying to 0:08:44.120 --> 0:08:47.080 shore up its own supply chains. Can you tell me 0:08:47.080 --> 0:08:49.479 about what's been happening in our back western Australia. 0:08:49.559 --> 0:08:53.760 Yeah, look about about thirty years ago as a company 0:08:53.800 --> 0:08:56.959 called Aluka. It actually had a different name back then, 0:08:57.000 --> 0:09:01.320 but it was a sand miner essentially, and it was 0:09:01.720 --> 0:09:06.200 basically getting mineral sands refining them and one of the 0:09:06.240 --> 0:09:09.720 byproducts was I think called monozite, which contains rare earths, 0:09:10.240 --> 0:09:12.240 and there was a market for it back then and 0:09:12.280 --> 0:09:15.720 it was being used i think for fluorescent lights. Suddenly 0:09:15.760 --> 0:09:19.240 that market collapsed and nobody knows that I look at 0:09:19.240 --> 0:09:22.320 these days who was responsible for it? But someone with 0:09:22.360 --> 0:09:25.200 a lot of foresight decided that rather than just dump 0:09:25.240 --> 0:09:27.520 all this stuff, they would store it. So they did 0:09:27.600 --> 0:09:30.920 this huge pit and started storing all this monozite. But 0:09:31.040 --> 0:09:34.240 what's happening there now is that it's building a refinery 0:09:34.600 --> 0:09:37.880 that will be capable of refining not just ordinary rear earth, 0:09:37.960 --> 0:09:41.440 but what's known as heavy rare earths, which are very 0:09:41.480 --> 0:09:46.199 difficult to obtain, elements that are required for super high 0:09:46.280 --> 0:09:52.800 end uses in wind turbines, in aviation, and particularly in 0:09:52.880 --> 0:09:56.040 defense purposes as well. And so here we have this 0:09:56.240 --> 0:09:59.600 Australian company which is now going to have a refinery 0:09:59.640 --> 0:10:02.439 which will the only refinery outside of China that can 0:10:02.480 --> 0:10:06.880 produce this kind of stuff. In the past few weeks, 0:10:06.920 --> 0:10:10.840 in fact, Linus, the other Australian company, has announced that 0:10:10.880 --> 0:10:16.199 it is also trying to upgrade its refining processes. Possibly 0:10:16.280 --> 0:10:19.319 they've got a couple of little operations in Western Australia 0:10:19.360 --> 0:10:21.800 and the big one in Malaysia as well, so it 0:10:21.800 --> 0:10:24.240 looks like they're going to try and be beat. I 0:10:24.360 --> 0:10:26.440 look it to the punch to seeing who can be 0:10:26.520 --> 0:10:29.880 the first refiner outside of China to be able to 0:10:29.920 --> 0:10:32.200 compete with the Chinese. Will provide the Western world with 0:10:32.240 --> 0:10:35.880 an alternative source. So we will be providing for the 0:10:35.920 --> 0:10:39.760 world for the first time a competitive source and an 0:10:39.800 --> 0:10:43.679 alternative source of these really valuable minerals. 0:10:43.840 --> 0:10:46.600 So there's clearly advantages to Australia being a bigger player 0:10:46.640 --> 0:10:49.480 in the critical mineral space. We know that both Morrison 0:10:49.480 --> 0:10:52.880 and Alberanezi governments has been billions backing the Luke and Mine, 0:10:53.200 --> 0:10:55.880 So what does it say about how our governments thinking 0:10:55.880 --> 0:10:56.800 about this industry. 0:10:56.960 --> 0:10:59.520 We can't just sit back and allow ourselves to be 0:10:59.559 --> 0:11:02.560 at the end to global supply chains. We need to 0:11:02.559 --> 0:11:05.440 put it simply, we need to make more stuff here. 0:11:06.080 --> 0:11:06.760 That simple. 0:11:07.080 --> 0:11:09.400 So the other and easy government in recent times has 0:11:09.440 --> 0:11:15.120 suggested a kind of reserve of these minerals that the 0:11:15.160 --> 0:11:18.440 government would stand behind it the industry and buy up 0:11:18.480 --> 0:11:20.960 these reserves when the price was low. 0:11:21.480 --> 0:11:25.280 We have some of the world's largest reserves of critical minerals, 0:11:25.280 --> 0:11:29.160 and the new strategy will set a vision for the sector. 0:11:30.080 --> 0:11:31.920 And there are some people in the industry who think 0:11:31.920 --> 0:11:35.040 that's a great idea. The chief executive of Linus she 0:11:35.280 --> 0:11:37.600 thought that it wasn't a terrific guide here at all, 0:11:37.840 --> 0:11:41.040 because I think she considered that this might primp profits 0:11:41.040 --> 0:11:46.560 at some stage. But the economic benefit is vast. Let's 0:11:46.559 --> 0:11:50.520 not kid ourselves there, and so there's an economic incentive 0:11:50.600 --> 0:11:57.480 to maintain that power. But the geopolitical advantage of having 0:11:57.559 --> 0:12:00.880 domination over some of these things, there's just difficult to 0:12:00.960 --> 0:12:05.240 imagine just how significant that is. Because if you have 0:12:05.720 --> 0:12:10.480 domination over the components that are required for defense situations, well, 0:12:10.480 --> 0:12:14.960 that puts you in an extraordinarily powerful political position as well, 0:12:14.960 --> 0:12:18.920 particularly when it comes to negotiating well anything from trade 0:12:18.920 --> 0:12:22.160 to defense packs to where you'd think you might be 0:12:22.320 --> 0:12:24.199 in the world pecking order. 0:12:26.240 --> 0:12:29.840 And fascinating stuff. Thank you so much for your time, pleasure. 0:12:41.080 --> 0:12:44.400 Also in the news, Jim Chalmers says he's pretty relaxed 0:12:44.400 --> 0:12:47.040 following the accidental release of advice given to him by 0:12:47.080 --> 0:12:50.520 Treasury which advised him to raise taxes and which cast 0:12:50.600 --> 0:12:53.439 out on his government's ability to meet their housing targets. 0:12:53.960 --> 0:12:56.200 The Treasury conceded the government is not on track to 0:12:56.200 --> 0:13:00.000 build one point two million homes over the next five years, 0:13:00.000 --> 0:13:02.160 so this doesn't mean they can't cause correct over the 0:13:02.160 --> 0:13:06.560 next four years to meet their target. And lawyers for 0:13:06.559 --> 0:13:09.960 former Greens candidate Hannah Thomas claims she was punched in 0:13:10.000 --> 0:13:12.200 the face by police during an arrest at a pro 0:13:12.240 --> 0:13:16.040 Palestinian protest in Sydney. Her lawyers say there is body 0:13:16.040 --> 0:13:19.280 worn camera footage showing the violent arrest, which they say 0:13:19.360 --> 0:13:23.160 resulted in extensive and serious injuries to her eye and 0:13:23.200 --> 0:13:26.720 it's required two rounds of surgery. The thirty five year 0:13:26.760 --> 0:13:28.680 old is suing the State of New South Wales and 0:13:28.720 --> 0:13:32.600 asking for charges against her to be withdrawn. I'm Daniel James. 0:13:32.600 --> 0:13:34.520 This is seven AM. Thanks for listening.