US national security adviser reveals new plan for Australia to help curb Chinese dominance

By Peter Hartcher

September 7, 2024 — 5.00am

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Washington DC: The United States intends to confront China’s dominance of the world’s key ingredients for cutting-edge technology by creating a major new network of democratic powers, including Australia, according to a top American official.

The US National Security Adviser, Jake Sullivan, revealed in an interview inside the White House that the scheme was a top priority and that he hoped to set it up before the next administration took power in January.

“It’s a big piece of business, it’s vital, and it’s unfinished,” he said.

White House National Security Adviser Jake Sullivan.CREDIT: AP

Even amid intensifying military and political rivalry between Washington and Beijing, technology was the most intense realm of contestation: “The technology competition between the US and China remains probably the place of greatest sustained and strategic friction,” the top adviser said.

The interview with the Herald and The Age is the only one he has given to Australian media in his three-and-a-half years as President Joe Biden’s national security adviser.

The 47-year-old has previously served as director of policy for then president Barack Obama and also was a senior adviser to Hillary Clinton during her term as US secretary of state.

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The potential members of such a new democratic supply network are the world’s seven leading industrial democracies – the G7 nations of the US, Germany, Japan, the UK, France, Italy and Canada – plus South Korea and Australia, according to US sources. This group collectively accounts for about 48 per cent of the global economy by value.

Of these nations, only Australia and Canada are major sources of raw critical minerals, indispensable for high-performance computer chips and feeding into civilian products like mobile phones, fibre optic cables, lithium batteries and solar panels but also military essentials such as radar, missile targeting, night vision goggles, turbines and solid-state lasers.

The intention was to “ensure that China cannot simply dump and drive alternatives out of business” in its drive to control the global supply of critical minerals, Sullivan said.

The price of two of the critical minerals needed for electric vehicles’ batteries have collapsed in recent months.

“Lithium prices have fallen more than 80 per cent since January 2023, and nickel prices have dropped almost 50 per cent in the same timeframe,” says a research note by Australian law firm Gilbert + Tobin. “Australian producers are feeling the pinch, with several operations being suspended or curtailed, leading to calls for enhanced federal and state government support in the form of subsidies, royalty relief and tax reform.”

While Australia has deep reserves of a great many critical minerals, it overwhelmingly sells them in a raw form for processing in other countries, predominantly China.

Canberra and Washington already have agreements to allow the US government to invest in Australian minerals projects to sustain supply to America, but Sullivan’s proposal is much grander and more ambitious. It would redraw the global trading system for these essential inputs and set a precedent for other sectors where the partner countries wanted to establish China-free supply chains.

Sullivan said that it was the most important matter for Australia and the US to work on: “Number one, the US and Australia need to work with like-minded partners on this friend-shoring issue relative to critical minerals and clean energy supply chains, because this is an area of significant strategic consequence,” he said.

A candid moment capturing President Joe Biden with Secretary of State Antony Blinken (left) and National Security Adviser Jake Sullivan during a summit in Bali. CREDIT: AP

He said the mining plan was a matter of urgency: “Before the Biden administration leaves office, we want to put forward a set of proposals for a group of like-minded countries that are targeted at this exact problem. How do you actually make sure that you’ve got sufficient incentives and frameworks in place to legitimately grow an alternative supply chain fast?

“I think the single biggest thing the US and Australia can do, from a strategic perspective, is really create effective, diverse, resilient supply chains when it comes to critical minerals that have huge implications for clean energy, but also for our defence industrial base.”

A former senior official in the Trump administration, Nadia Schadlow, strongly supported this ambition and called on Canberra to do more in co-operation with Washington.

“On the critical mineral side, we both need to get serious about reducing dependencies on China,” the Trump administration’s deputy national security adviser told the Herald and The Age.

“In that domain, the US has been identifying that as a vulnerability for around 40 years. I think the Australians could come forward with models for what they could produce, how they can produce, and how they could do better in this domain. You certainly have a range of key minerals. That’s a clear area where we can work together.”

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Peter Hartcher is political editor and international editor of The Sydney Morning Herald and The Age.Connect via email.

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