Australia has pledged to give more scrutiny to foreign investments in key commodities linked to electric cars and clean energy, as a potential warning to China, which currently dominates the market.
Treasurer Jim Chalmers asked Treasury to work with the Foreign Investment Review Board and a number of other stakeholders to conduct a review of foreign investment in sectors like lithium and rare earths, he told a conference in Sydney on Friday.
Chalmers said in his speech that we ll need to be more assertive about encouraging investment that aligns with our national interest in the long term.
In a speech earlier this month, Resources Minister Madeleine King said that the Asian nation's dominance of the market had resulted in inherent vulnerabilities of concentrated supply chains, although Chalmers didn't directly identify China investment as a target of the review. Australia s latest move adds to a push against China's dominance of battery metals and renewable energy technology after moves by President Joe Biden aimed at limiting the nation's influence on key supply chains. Canada consolidated its rules around foreign investments in the sector last month and ordered three Chinese firms to sell their stakes in a trio of lithium explorers.
Australia, which has some of the world's largest deposits of the resources vital in clean energy, military technology and advanced computers, is working with the US to increase its capacity in mining and processing of lithium and other critical minerals. Biden called for allies to bolster processing capabilities, and has offered incentives to boost domestic production.
Both the top two China top two lithium producers in key operations in Australia are the Ganfeng Lithium Group Co. and Tianqi Lithium Corp. Ganfeng holds 50% of the Mount Marion mine, while Tianqi controls the Kwinana refinery and a share of Western Australia's Greenbushes, the world's biggest lithium mine.
In February, China-based Shenghe Resources Holding Co. added a 19.9% stake in Peak Rare Earths Ltd., a Perth-based developer of projects in Africa and the UK.
Resources Minister King told Bloomberg in October that there was interest in the sectors from investors in the European Union and from partners including South Korea.
Chalmers has ruled out Australia's involvement in setting up an OPEC-like set up for critical minerals, despite noting discussions among South America on a possible agreement on production and pricing, and Asia on a similar set up for nickel and other key battery minerals.
Indonesian Investment Minister Bahlil Lahadalia proposed the idea of an alliance of nickel suppliers that he said would help to unite government policies on the in-demand battery metal. The plan had been discussed with both Canada and Australia.
Instead of locking down supply chains and trying to create an OPEC-like set up for critical minerals, we d be better off responding by diversifying global supply chains and making them more resilient, Chalmers said.
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