The quiet race China is winning as countries scramble for rare earths, uranium, gold and other strategic resources
China’s restrictions on rare earths is a reminder of a much deeper problem, as countries scramble for key resources in a bid to secure their future.
China’s restrictions on rare earths is a reminder of a much deeper problem, as countries scramble for key resources in a bid to secure their future.
The People’s Republic already has a firm grip on most of the mining and processing of rare earths, but it’s also locking up the supply of plenty of other strategic resources, from uranium to gold. And one expert says it’s all part of the same playbook.
“China is following a long-term Mahanist strategy of acquiring privileged access to resources,” Anne-Marie Brady, a specialist in Chinese foreign policy from the University of Canterbury, told news.com.au.
Alfred Mahan was a US naval historian whose analysis on how an emerging power can become a great power shaped US strategy, and that of imperialist Japan in the 1930s.
Mahan’s core idea was that maritime power equals national power.
Whoever controlled sea lanes, chokepoints, and coaling stations (in Mahan’s day, ships burned coal), ultimately controlled global trade and by extension, world influence.
China has mirrored this by expanding its navy, and financing and leasing overseas ports along key routes: for example, Australia’s Port of Darwin, and Sri Lanka’s Hambantota Port.
“China’s naval doctrine switched to Mahanism in the 1980s. We are seeing the fruits of this now,” Ms Brady said.
“China is a sea power in the Indo-Pacific and has a blue water navy which can protect sea lines of communication. China has acquired control over the strategic resources it needs to become a great power.”
In the case of uranium, the Chinese government has been busy stockpiling and building up equity in foreign mines as it forges ahead with its vast nuclear program.
It’s a decades-long strategy without the institutional constraints that democracies often struggle with. And it’s left the US playing catch-up, struggling to secure its own stable uranium supply.
China has used similar tactics with lithium, cobalt and nickel.
Gold, too, is being stockpiled in China at a rapid clip as the country seeks to diversify its foreign exchange reserves away from the US dollar. Officially, Beijing holds more than 2,200 tonnes of gold, but analysts believe the real figure is much higher.
The BRICS nations, which include China, Russia and India, have even discussed creating a new gold-backed currency that would compete with the dollar.
“We are returning to an era of two worlds,” Ms Brady said.
“Strategic technology and strategic minerals will be one of the clear divides: the likemindeds who support the rules-based multilateral order, versus the authoritarians in a China-centred order.”
The professor said in the case of rare earths, the US and the EU should make a strategic investment in processing in order to break the Chinese monopoly.
She pointed out that New Caledonia, an island nation in Australia’s backyard, has a quarter of the global supply of nickel. But most of it is being exported to China for processing.
“France and Europe should buy it and process it,” Ms Brady said of the metal, which is essential to modern infrastructure.
“Same for Australian and New Zealand rare earths.”
Hunt for rare earth suppliers heats up
Rare earths have become front-and-centre of the US-China trade war after the Chinese government last week further restricted exports of the metals.
Beijing also said any export requests for products used in military goods would be rejected – a blow to American jets, ships and submarines.
Rare earths are also used in electric vehicle motors, wind turbines, computer chips, lasers, and advanced robotics: all key components of the growing AI and clean energy industries.
The 17 metallic elements are not “rare” per se, but difficult and costly to refine, a problem China has long since solved.
Enter Australia, the world’s fourth-largest producer of rare earths – though it still lacks the refining infrastructure needed to process them domestically.
At a scheduled meeting with Trump on Monday, Anthony Albanese could make the case that Australia is a viable alternative to Chinese supply, pointing to a planned $1.2 billion strategic reserve. Investors certainly hope he will.
Another key date that might decide how the saga plays out is a potential meeting between Trump and Chinese President Xi Jinping at APEC in South Korea at the end of the month.
Depending on how the meeting goes, China might relax or tighten its rare earths restrictions.
But the US has learnt the hard way that it cannot allow a rival power to lock up such a critical supply.
