‘Broken market’: Ex-minister Dominic Raab on China’s stranglehold over the minerals economy amid US deal

Manufacturers of products from mobile phones to car batteries and military equipment will find their business model “totally torpedeoed” if Western countries fail to break China’s stranglehold on critical minerals, former UK foreign minister Dominic Raab warns. But doing so would require taxpayer money to be invested in the critical minerals sector for the foreseeable future, he said. His comments come as Resources Minister Madeleine King said the deal struck in the White House this week would “lock Australia and the US together in a really productive relationship around critical minerals and rare earths”. Under the agreement Donald Trump and Anthony Albanese signed earlier this week, the countries will pour $1.5 billion apiece into critical minerals within six months — with the potential to fund a $13 million pipeline of projects. While the final details only came together at the last minute, Ms King said a lot of work had gone into the deal over a number of years. “That’s what we bring to the table in Australia (when) we speak to our friends in America, it’s a track record of actually mining and actually processing, and the Australian government stepping up to make its contribution to this,” she told The West after returning from Washington. Mr Raab, who now advises critical minerals investment firm Appian Capital, described the deal as “a real statement of intent” about the US and Australia’s desire to break China’s stranglehold on the market. Including refining and processing, China controls 90 per cent of the global market for critical minerals and rare earths. “It’s a broken market. It’s certainly not a free market in the traditional sense,” Mr Raab told The West from Perth. “And so the question is always going to be, how do you level the playing field so that Western investors can compete with the cost when it comes to the cost of capital, which is heavily subsidised for Chinese companies by the state. “The short answer is, for the foreseeable future, there’s going to need to be seed capital provided by government to incentivise those areas of the market which won’t otherwise attract investment.” Mr Raab said China had been taking a long view, buying up critical minerals for over two decades. But governments and businesses elsewhere had failed to see the crisis coming. “The industrial manufacturing businesses have been so focused on their shareholder cycles, which are relatively short-term, that they’ve missed the fact that in a relatively short order, a number of a few years, if they don’t have these supply chains, their business model . . . will be totally torpedoed,” he said. “It’s a massive issue.”