For decades, Australia assumed economic power flowed from geology. Resource wealth delivered export earnings, government revenue and strategic confidence. The emergence of China Mineral Resources Group (CMRG) over the past four years suggests otherwise. In increasingly contested markets, power may lie less with those who own resources than with those who organise demand.
Australia has spent years considering how to strengthen supply-chain security. Governments have commissioned reviews, published strategies and invested billions to secure access to fuel, critical minerals, semiconductors and other essential inputs. These efforts reflect a growing recognition that economic resilience and national security are becoming increasingly intertwined. But while Australia has focused on who controls supply, China has been steadily strengthening its ability to shape demand.
The distinction goes to the heart of how economic power is changing.
Australia has long occupied an enviable position in the global economy. Our miners supplied the world’s largest steel-producing nation with iron ore that couldn’t easily be sourced elsewhere. China needed Australian ore, mining companies generated extraordinary profits and governments collected billions in taxes and royalties. Success reinforced an assumption that ownership of a strategic resource created leverage within the relationship.
CMRG has challenged that assumption. By coordinating negotiations, shaping pricing mechanisms and strengthening the bargaining position of Chinese steelmakers, Beijing is seeking through CMRG to convert purchasing power into strategic influence. Last week, senior executives at BHP and Fortescue suggested the balance of power was shifting. The question is not simply whether Chinese buyers secure lower prices, but who captures value across the broader system.
Supply-chain security has become a dominant concept in economic policy. Demand-chain power deserves similar attention. Large, coordinated buyers can influence investment decisions, alter commercial behaviour and shape market outcomes. They can affect where capital flows, which projects proceed and how value is distributed across an industry. China’s approach to iron ore purchasing reflects an understanding that markets are strategic environments that can be organised to advance national interests.
Australia often analyses commodities as products while China increasingly approaches them as systems. Iron ore depends on a network of producers, customers, financiers, logistics providers, regulators, exchanges and markets. Influence over any one component can create an advantage. Influence over the system determines where value accumulates and who captures it.
CMRG is attempting to strengthen China’s position within the system through which information, capital, demand and bargaining power flow. Rather than ownership of a resource, the objective is to influence the conditions under which that resource is bought, sold and valued.
This carries implications well beyond iron ore. Too much of Australia’s economic security debate remains centred on extraction, which is only one point within a much larger value chain. The greatest leverage often lies further downstream, where refining, manufacturing, financing, standards and end-user demand reside. These activities determine where profits accumulate, where investment decisions are made and who sets the rules governing markets.
The same challenge sits at the heart of Australia’s critical-minerals strategy. Policymakers often focus on securing supply and increasing production. Both are necessary but neither is sufficient. If Australia limits its ambitions to extracting resources while others dominate processing, technology, financing, and markets, the structural vulnerabilities already emerging in iron ore may also emerge in critical minerals.
Competitiveness also shapes economic power. Global capital compares jurisdictions relentlessly, assessing productivity, labour costs, energy prices, taxation and regulatory settings. Attractive geology cannot indefinitely compensate for declining competitiveness. Countries that become less attractive as investment destinations gradually lose industrial capability, economic resilience and strategic flexibility. Resource wealth creates opportunities. Competitive economies convert those opportunities into an enduring advantage.
Diversification forms part of the answer, though not in the way it is often discussed. China will remain Australia’s most important trading partner for years to come. Rather than replacing China, the objective should be to reduce concentrated exposure by expanding commercial and industrial relationships with India, Japan, South Korea, Southeast Asia and Europe. Strategic options strengthen resilience. Dependence narrows it.
Experience in dealing with CMRG offers a useful reminder that economic security is a contest over who controls the decisions that determine how resources are financed, processed, transported, sold and consumed. Countries that shape those decisions acquire influence that extends far beyond any individual commodity.
Australia’s economic success has long rested on what lies beneath the ground. Future economic power may depend far more on understanding what happens above it. Countries that organise markets, coordinate investment and shape demand increasingly influence where value accumulates and who captures it. Australia has invested considerable effort in understanding supply-chain security. The next challenge is understanding the power of the demand chain.