Chinese Regime Will Face Hostile America If Critical Mineral Trade Cut

Australia's former Ambassador to the U.S. Joe Hockey at Parliament House in Canberra, Australia, on Sept. 15, 2015. Stefan Postles/Getty Images

Beijing has been warned if it tries to cut critical mineral exports to the United States, it will face a hostile reception.

Speaking at a private forum in Melbourne hosted by Hamilton Wealth Partners, former Australian ambassador to the U.S. and former federal treasurer, Joe Hockey, said that there had been discussions in the U.S. that there was a potential next year for Beijing to cut back the supply of critical minerals to the west, The Australian newspaper reported.

“In terms of critical minerals, my concern is—and there has started to be a few reports in the U.S. suggesting this—is that after the midterm elections, and with a re-empowered [Chinese Leader] Xi Jinping, as of next year, China will start to turn down the tap on the supply of critical minerals to the U.S. and other places,” Hockey said.

“Now, if they even start to adjust that tap, the U.S. is going to go nuts.”

The comments from Hockey come after the Biden Administration moved to cut the Chinese regime off from certain semiconductor chips and their manufacturing techniques that are made with U.S. technologies on Oct. 7.

The move was viewed as a follow-up to the CHIPS and Science Act, which U.S. President Joe Biden signed into law in August.

US Could Pivot to Australia To Fill the Critical Mineral Gap

However, Hockey noted that if Beijing did decide to cut back its exports of the critical mineral to the U.S., it would create genuine opportunities for Australia to fill the supply chain gap.

“In truth, Australia is about to become a very significant supplier to the U.S. and Western allies, national security companies and the bigger prime industry. We are in an incredible position, and we are well underway getting involved with it,” Hockey said.

The former ambassador also noted that Washington was looking to invest heavily in Australia for specific projects that would guarantee a supply chain for the U.S.

“They’ve never really done that before. They’ve never used taxpayer money to invest in another country in order to get a guaranteed supply chain in critical areas. That’s an opportunity for Australia,” he said.

The move to secure the U.S.’s supply of critical minerals comes after Biden signed an executive order to secure America’s supply chains against a wide range of risks and vulnerabilities.

The Australian and Investment Commission (AUSTRADE) has said that they expect the executive order to increase the level of interest in Australia-sourced rare earth materials. In particular, they note that Australia could see an increasing interest from electric vehicle manufacturers.

“U.S. processors will be looking to partner with mining companies that can guarantee supply from friendly countries,” Austrade said. “Australian mining companies will find themselves in a strong competitive position as U.S.-based critical minerals processors seek to expand capacity.”

General Motors Ahead of the Curve

Some U.S. companies are getting ahead of the possible supply cut from China and are already seeking out Australian partners for their supply chains.

General Motors (GM) signed a landmark agreement with an Australian company for the production and supply of critical minerals for their new tranche of electric vehicle (EV) batteries.

The agreement is critical to secure “all battery raw material to support GM’s goal of 1 million units of EV capacity in North America by the end of 2025,” GM said in an Oct. 11 statement.

“This new collaboration builds on those commitments as we look to secure supply through the end of the decade while also helping continue to expand the EV market,” said Jeff Morrison, GM vice president of global purchasing and supply chain.

The agreement is conditional on the commitment of $69 million, which will grant GM the right to purchase uncommitted nickel and cobalt sulphate produced by Queensland Pacific Metals (QPM) over 15 years from its proposed Townsville Energy Chemicals Hub in Northern Australia.

According to GM, the nickel and cobalt will help power a broad portfolio of trucks, SUVs, vans, and luxury vehicles from the carmaker, including the Chevrolet Silverado EV, GMC Hummer EV Pickup and SUV, Cadillac Lyriq, Chevrolet Blazer EV, and Chevrolet Equinox EV.

“The collaboration with Queensland Pacific Metals will provide GM with a secure, cost-competitive, and long-term supply of nickel and cobalt from a free-trade agreement partner to help support our fast-growing EV production needs,” Morrison said.

He said the agreement demonstrates GM’s “commitment to building strong supplier relationships and is aligned with our approach to responsible sourcing and supply chain management.”