Linda Reynolds: Global commodity markets are the new security battleground

There is a cold war going on between China, Australia and our allies. A battle we are losing.

A battle not being fought on a traditional battlefield but in global mining commodity markets.

This fight has grave economic and security implications for us all and it is imperative for Australia and our global partners to take decisive action and effectively fight back.

The recent announcement of BHP suspending its Nickel West operations marks a pivotal moment, not just for our nickel industry, but for all critical mineral and rare earth markets.

The nickel development underscores the significant challenges our sector faces, driven by global market dynamics and domestic and global policy shortcomings.

As we navigate this critical juncture, it is imperative that we, as industry leaders and policymakers, recognise the strategic importance of the nickel industry and collaboratively address these challenges to secure our nation’s future.

Once we have a template for the nickel industry, we can adapt it to other commodities.

To save our critical mineral and rare earth industries, including nickel, we must first understand how our nickel pickle has happened.

Significant Chinese investment combined with Indonesia’s lower costs, faster development and regulatory timelines, affordable reliable power, and investor-led infrastructure has weakened our domestic market.

Despite these significant challenges, Australia’s nickel remains significantly less emission-intensive than that of Indonesia. Yet, our market share has plummeted from 16 per cent in 2003 to an insignificant 4 per cent today.

China’s systematic manipulation of global commodity markets through subsidies, export restrictions and strategic stockpiling, has undermined global prices and market stability.

This manipulation aims to consolidate China’s dominance and weaken competitors globally. The current suspension of Nickel West operations highlights the vulnerability of Australia’s strategic position and highlights the need for a coordinated policy response at the national and State levels.

Disappointedly, the Albanese Government has exacerbated challenges for Australia’s nickel industry through policies that have increased labour and energy costs, significantly raising operating expenses. Moreover, the failure to designate nickel as a critical mineral has hindered the sector’s ability to access crucial financial support and government programs.

This lack of decisive action has left the industry vulnerable amid rising global demand for nickel, jeopardising both its domestic stability and Australia’s strategic position in critical mineral supply chains.

In WA, the Cook Labor Government’s new environmental laws and changes to the Cultural Heritage Act have created regulatory barriers for the nickel industry. These reforms have inadvertently increased operational complexities and costs for our mining companies.

To support the sector’s resilience and competitiveness, initiatives to streamline regulatory processes, reduce energy costs through increased gas supply, and foster a supportive regulatory environment are crucial.

These measures are essential for maintaining the industry’s contribution to the economy through royalties, taxes, and high-paying jobs, ensuring sustainable growth amidst global market pressures.

Addressing the nickel pickle will require decisive national leadership and comprehensive sector-by-sector strategies. The implications of a weakened nickel industry extend beyond economic hardship. Nickel’s role in the production of advanced military technologies is vital to strengthening our national security.

As China continues to manipulate the market, our inability to maintain a competitive edge not only impacts our economic sovereignty but also compromises our strategic alliances. Our allies depend on secure and stable supply chains for critical minerals and our current nickel pickle places this stability at grave risk.

To reclaim our market share and ensure alternate supply chains, we must identify domestic capital incentives, cost reduction strategies, and robust ESG metrics. Policy certainty is crucial for future investments and market incentives are essential.

In Washington DC this month, I participated in the Australian-American Leadership Dialogue and it was heartening to hear just how seriously the United States is taking the need to counter China’s dominance in critical minerals.

A bipartisan group of US senators has just introduced the Global Strategy for Securing Critical Minerals Act of 2024, which aims to strengthen diplomatic and financial tools to ensure the US and its allies, including Australia, maintain a competitive edge in this vital sector.

This is something that Australia must support and urgently enact complementary legislation. Now more than ever, Australia must take a decisive stand against this threat.

It is imperative that we work collaboratively with the entire nickel industry to develop innovative mining and production techniques that enhance efficiency and sustainability.

The expertise and leadership within the industry are crucial in driving these advancements. By leveraging cutting-edge technologies and adopting best practices, we can mitigate the impacts of external market pressures and secure a robust future for our sector by working together.

As global leaders in the nickel industry, Australia must mobilise our collective expertise to address these challenges. The Coalition remains committed to supporting the industry through strategic policy initiatives and fostering a collaborative environment that enables innovation and resilience.

Australia’s future hinges on our ability to safeguard all our critical industries from foreign manipulation and economic pressures. By recognising nickel as a critical mineral, providing targeted financial support, and implementing strategic policies, we can fortify our industry and enhance our global standing.

The time to act is now, and it is through our united efforts that we will secure a prosperous and secure future for Australia and our allies.

Australians must come together in new ways to work with our allies to collaboratively address these challenges and secure our nation’s and our allies’ economic and security future.

The nickel market is the perfect place to start. We can and we must.

Linda Reynolds is a Liberal Senator for WA.