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AUKUS needs to focus on critical minerals

Posted By on June 22, 2023 @ 06:00

Much of the public policy discourse on AUKUS [1], the security partnership between Australia, the UK and the US, has focused on nuclear-powered submarines (Pillar 1). Far less attention has been paid to Pillar 2 [2], which aims to accelerate the partners’ collaboration on developing advanced capabilities such as hypersonics and autonomous systems. These capabilities, and the rules-based order they uphold, depend heavily on critical minerals. Yet the AUKUS agreements don’t specifically address the supply chains for processed critical minerals and their resulting materials.

Today, ASPI released a report by Ben Halton and Kim Beazley, AUKUS and critical minerals: hedging Beijing’s pervasive, clever and coordinated statecraft [3], which explores global critical-mineral supply-chain vulnerabilities. The authors argue that through AUKUS, the UK and the US should engage Australia to spearhead mineral diversification.

China eclipses not only AUKUS for processing critical minerals into usable forms but the rest of the world combined. Without a reliable supply of critical minerals, states are open to economic coercion in various technology industries. Defence manufacturing is particularly exposed to supply-chain challenges.

Beijing’s economic coercion, underwhelming global action and haphazard domestic policy [4] have highlighted the risk of disruption to global rare-earth and critical-mineral supply chains. China has developed a virtual monopoly over rare-earth elements and significant control of critical-mineral supply chains and is willing to use its position of strength to limit access to those strategically important materials.

The many attributes of China’s dominance in critical minerals include complex and carefully guarded processes for making critical minerals usable. That extends to manufacturing essential inputs to technologies that require rare earths, such as permanent magnets, which enable technologies such as leading-edge missile guidance, satellites and aircraft. All of that is backed up by strong investment in top-quality research. China’s universities and national labs now lead the world in high-impact research on critical-minerals extraction and processing, highlighting their continued efforts to innovate and achieve technological breakthroughs in this area. ASPI’s Critical Technology Tracker [5] provides empirical evidence of China’s lead in the publication of research on critical minerals extraction and processing.

Secure access to processed critical minerals enables the emerging technologies that will ‘win’ or, better still, deter the next global war. It will also help to ensure the continuity of a global economy free from the risks of coercive statecraft. China would benefit, too, from a more diverse supply, since its requirements will continue to grow over the coming decades.

It’s a positive sign that so many like-minded countries like Japan, the US, Canada and Australia aren’t just identifying that there’s a problem but are willing to take action. Unfortunately, creating resilient and commercially viable supply chains is beyond the reach of any one nation. Now is the time for ‘minilateralism’ to take centre stage.

Halton and Beazley argue that AUKUS, as an existing minilateral partnership, is well situated to tackle critical minerals and rare earths in concert with other relevant countries. In doing so, they offer five priorities for consideration. Given that all AUKUS capabilities rely on critical minerals, the AUKUS countries should add critical minerals to AUKUS Pillar 2 and, in doing so, develop a consistent definition of critical minerals among the partners. Contextualising AUKUS against that definition is necessary to prompt informed action. The Australian government must also refine its 2022 critical-minerals list to reflect better the strategic situation we face rather than primarily commercial factors.

AUKUS should be the premier minilateral mechanism for creating resilient critical-mineral supply chains for each partner while working closely with friends and allies. This is consistent with Pillar 2’s remit not being an exclusive arrangement. And it will require the AUKUS partners to cast aside any reservations about working intimately with one another.

AUKUS provides many opportunities for like-minded countries to address the supply-chain vulnerabilities for critical minerals and rare earths. However, other mechanisms could be used in parallel with AUKUS, which could draw in additional partners, who would bring with them demand, capital, experience and technology.

For example, Japan has had plenty of experience working with Australia, Australian companies and Australians to create supply-chain security for energy and rare earths. The Japanese company INPEX’s investment in northern Australia’s Ichthys LNG [6] is among the world’s most significant oil and gas projects. This joint venture provides energy security for Japan. For more than a decade, the Japanese government has invested in Australian company Lynas Rare Earths [7] to gain independence from Chinese processors.

Australia’s trilateral relationship with Japan and the US, and the Quad (which brings India into the picture), should also be part of Australia’s approach to providing the world with an alternative, resilient rare-earth and critical-mineral supply chain.

Australia offers an unrivalled rallying point to drive secure critical-mineral supply among a wide field of vested nations, using AUKUS but not limited to AUKUS partners. Australia has globally superior reserves and substantial expertise, so it has a crucial role. The Australian government must continue to prioritise policy action to create new economic opportunities and strengthen national resilience and security.

Article printed from The Strategist: https://www.aspistrategist.org.au

URL to article: https://www.aspistrategist.org.au/aukus-needs-to-focus-on-critical-minerals/

URLs in this post:

[1] AUKUS: https://www.pm.gov.au/media/joint-leaders-statement-aukus

[2] Pillar 2: https://pmtranscripts.pmc.gov.au/sites/default/files/AUKUS-factsheet.pdf

[3] AUKUS and critical minerals: hedging Beijing’s pervasive, clever and coordinated statecraft: https://www.aspi.org.au/report/aukus-and-critical-minerals-hedging-beijings-pervasive-clever-and-coordinated-statecraft

[4] economic coercion, underwhelming global action and haphazard domestic policy: https://www.aspistrategist.org.au/australia-and-its-partners-must-do-more-to-avoid-dependence-on-china-for-rare-earths/

[5] Critical Technology Tracker: https://techtracker.aspi.org.au/tech/critical-minerals-extraction-and-processing/?c1=aukus&c2=cn

[6] Ichthys LNG: https://www.inpex.com.au/projects/ichthys-lng/

[7] Lynas Rare Earths: https://lynasrareearths.com/

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