China’s $120bn minerals blitz – and what Australia stands to lose

share_windows This article appeared in the Lowy Institute's Interpreter on March 20 2026.

China is no longer just buying minerals. It is building control over the industrial system around them – refining, processing, logistics, and manufacturing that will underpin the green supply chains of the future. That should concentrate minds in Canberra and in every boardroom with exposure to the resources sector.

A new Climate Energy Finance report shows the scale of the push. Since 2023, China has committed more than US$120 billion in outbound investment across critical minerals and metals. From lithium in Zimbabwe to nickel processing in Indonesia and iron ore infrastructure in Guinea, Chinese capital is moving with deliberate intent across the Global South. The aim is not simply to secure raw materials. It is to lock in the feedstock, processing capacity, and industrial partnerships needed for batteries, electric vehicles, solar panels, wind turbines, and green industrial commodities.

Lithium is the clearest warning. Australia is the world’s number one lithium exporter, with more than 50% of global market share, and 97% of its exports destined for China. Yet China has been systematically investing in lithium processing across Africa and South America to reduce that reliance, even as its own domestic production now outstrips Australia’s. Albemarle’s lithium hydroxide refinery in Kwinana, Western Australia, closed in February 2026 after only four years, underscoring the cost and supply-chain advantages China has built elsewhere.

Iron ore tells the same story, even more sharply. Australia is the world’s number one iron ore producer, and China remains by far its dominant market. The US$23 billion Simandou iron ore project in Guinea, anchored by Chinese equity, delivered its first shipment to China in January 2026. Once fully ramped up by 2029, Guinea will become the world’s third-largest iron ore exporter, as part of China’s explicit strategy to reduce its reliance on Australian and Brazilian supply. The high-grade ore produced by Simandou is also suitable for green steel and aligned with China’s ambitions to decarbonise.

These examples show China’s real transformation. It is not just securing supply and has moved beyond the old extractive model to a strategy increasingly ecosystem-driven: mine, refine, process, manufacture, build infrastructure, secure logistics, and embed long-term industrial relationships. Through these efforts, it is shaping who captures the margin, the jobs, the know-how, and the leverage across the green economy.

That is also why the model appeals across much of the Global South. For many host governments, Chinese investment offers more than capital. It promises roads, rail, local jobs, processing plants, industrial parks, and a stake – however uneven – in downstream value creation. None of this makes the model risk-free. Environmental, social, human rights, and political tensions are real, as are concerns about overcapacity, market distortion, and strategic dependence. But it does make the offer more attractive than the old dig-and-ship model.

This broader shift is also where Australia’s debate often goes astray. Too much discussion about critical minerals is framed almost entirely through national security and military competition. Those concerns are real. But critical minerals are not just security assets. They are the base layer of industrial competitiveness in the zero-emissions economy.

Against this backdrop, the Albanese government’s Future Made in Australia agenda is directionally sound. The push for reindustrialisation is driven by several core objectives: strengthening economic resilience and national security, creating higher value-added jobs, and responding to the reconfiguration of global supply chains. The central risk, however, lies in trying to balance goals that are often in tension – and failure could disrupt access to key markets or technologies.

Australia’s industrial policy on critical minerals is increasingly shaped by the broader global trend towards resource nationalism and may itself invite retaliation. Attempts to build alternative supply chains by policy fiat may produce outputs that struggle to remain internationally price-competitive. Signs of global overcapacity are already emerging in sectors such as solar photovoltaics and battery cells, making entry into these markets — at higher Australian cost — even more challenging. There are also domestic policy risks. First, public capital may be directed towards sectors that lack a durable comparative advantage, raising doubts about long-term investment efficiency. Second, such intervention may distort market signals and hinder the more organic process of industrial selection and upgrading based on underlying competitiveness.

Facing such political and geopolitical complexity, Australia must make harder choices than current rhetoric suggests. Australia does not need a blanket rejection of Chinese capital, nor a return to complacent dependence on it. It needs a clearer national framework: where foreign investment is welcome, on what terms, and in which parts of the value chain domestic capability must be built and retained. Selective cooperation with China, where it strengthens Australian capability and can be governed prudently, may in some cases serve Australia better than reflexive exclusion. This is what green energy statecraft should mean: treating critical minerals not as isolated export commodities, but as strategic assets around which processing, technology, skills, and industrial ecosystems can be built.

For Australia, critical minerals and metals are not just a source of export revenue, but a test of whether the country can turn resource wealth into long-term industrial capability and national resilience.