[Image source=Asia Economy DB]
[Asia Economy Reporter Hyunwoo Lee] The battle for rare earth elements, the core raw materials of advanced weapons such as radar, is spreading beyond major powers like the United States and China to resource-rich countries such as Australia and Canada. The Australian and Canadian governments have successively blocked Chinese companies from acquiring domestic mines citing national security concerns. There is a growing view that the perception of rare earth elements as strategic weapons rather than mere commodities is spreading mainly among resource-rich countries.
According to foreign media including The New York Times (NYT) on the 7th (local time), the Australian Foreign Investment Review Board (FIRB) on the 24th of last month withheld approval for the acquisition of Australian mining company Altona Metals by China's Shandong Gold Group, stating that further review was necessary. Shandong Gold Group withdrew its acquisition plan. Earlier in April, the Australian government also rejected a plan by China's Baosteel Group to acquire Northern Minerals, an Australian company owning lithium mines.
The Canadian government is also delaying final approval despite the completion of the acquisition contract of Canadian mining company TMAC Resources by China's Shandong Gold. Major foreign media reported that in the second quarter, Australia and Canada collectively rejected six acquisition attempts by Chinese companies for mining assets.
These decisions by Australia and Canada are considered unprecedented. Both governments stated that the monopolization of rare earth resources used in advanced weapons production poses a threat to energy security, and this is the first time they have imposed regulations on foreign companies' acquisition of mines citing security reasons. Foreign Policy reported that 61% of lithium produced in Australian mines is owned by Chinese companies. According to the Canberra Times and others, Australian Defense Minister Linda Reynolds said at a press conference on the 6th, "The supply of rare earth elements used in advanced weapons such as the F-35 fighter jet is overly concentrated in China," adding, "We will work with the United States and other allies to strengthen the security of the global supply chain going forward."
This policy aligns with the United States' strategy to significantly reduce dependence on China's rare earth supply. Since rare earth elements are essential raw materials for advanced weapons, securing a stable supply is considered crucial. Lithium is used in batteries for electric vehicles and combat drones, scandium is used in the manufacturing of stealth fighter bodies, and cobalt is utilized in tank armor production. Currently, most of these materials are produced and refined in China and distributed worldwide. According to the U.S. Geological Survey (USGS), China's rare earth resource production last year was 132,000 tons, accounting for 62% of the global production of 210,000 tons.
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