China's recent ban on the export of two rare metals, gallium and germanium, may unintentionally bring substantial economic benefits to Australia, as reported by news.com.au.
As both minerals are integral to the development of computer chips, weaponry and solar panels, this restriction on their export could lead to a global search for alternative suppliers, with Australia positioning itself to meet this demand.
A high-ranking official from China's Communist Party stated that the imposed restrictions on these minerals, of which China produces approximately 95% of the global supply, were merely the first step in a series of trade bans aimed at protecting the nation's security interests.
This move comes hot on the heels of a series of sanctions imposed by the United States, effectively barring Chinese developers from accessing advanced semiconductor technology from American companies.
Moving forward, Australia anticipates considerable financial benefits from these new bans as it seeks to capitalise on its decision to align with Washington's security arrangements rather than maintain economic ties with Beijing.
Economic weapons
Concern is increasing worldwide over the potential for more disruptive export bans from China, particularly in light of its dominance in the supply chains of rare earth and critical minerals.
Minerals like gallium and germanium are essential to modern technology, from electric motors, turbines and batteries to consumer electronics such as smartphones.
China's mining operations account for 70% of the global production of these minerals and more than 85% of the total supply.
However, Beijing's willingness to leverage these materials as economic weapons to further its diplomatic objectives has prompted multinational corporations to seek alternative sources.
Need to diversify supply chains
The new bans have further highlighted the urgent need to diversify supply chains, prompting countries such as the US and Canada, along with Australia, to subsidise and support the establishment of their refining plants.
Australia is bracing for a backlash from Beijing as it subsidises its domestic iron ore production and invests heavily in alternate suppliers to reduce reliance on Australian exports.
With more than 80% of its territory yet to be surveyed for deposits, Australia projects a supply of 4.2 million tonnes of critical minerals and the country is optimistic about its future prospects.
By 2040, the country expects these minerals to boost the national budget by A$71 billion and create more than 115,000 jobs.
Looking ahead, Australia's strategy to increase domestic downstream capabilities will ensure domestic supply security, better-monitored exports and protect its strategic and energy security.