China controls over 80 per cent of global rare earths processing and nearly all heavy rare earth production. It has spent decades constructing this dominance through state-backed investment, export restrictions and strategic acquisitions. Australia, alongside the US, Japan and others, has begun pushing back, attempting to build alternative, diversified supply chains. But Beijing and its proxies are not going to relinquish that stranglehold willingly.
So the Northern Minerals case is a litmus test for Australia’s legal system and our strategic resolve. If we fail to enforce foreign investment directions now, we send a clear signal to Beijing and the world that we’re unwilling to defend the foundations of our economic and national security. Worse still, we risk undermining the very alliances and partnerships we’re cultivating to support a rules-based critical minerals ecosystem.
With this action, the government has also reinforced the strengthened powers of Australia’s foreign investment regime, which was updated in 2024 to reflect contemporary geo-economic risks better. This isn’t a hypothetical threat; it’s the lived experience of a country repeatedly targeted by foreign interference in sectors as diverse as academia and infrastructure and now mining.
There’s no doubt that Beijing will respond, definitely diplomatically, perhaps economically. We’ve seen this playbook before: in 2010, China cut off rare earth exports to Japan during a territorial dispute. From 2018, it unleashed sweeping trade sanctions on Australia after national security decisions on 5G telecommunications, foreign interference laws and the calling of an inquiry into the origins of COVID-19.
Australia must now demonstrate that our sovereignty isn’t for sale. This means more than just legal action. It means accelerating investment in domestic processing and refining capacity. It means supporting like-minded partners through joint ventures and strategic stockpiles. It means aligning our critical minerals strategy with broader defence and national security planning. And it means holding foreign investors, no matter how politically connected, to the same standards we expect from Australian firms.
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The treasurer’s lawsuit isn’t just about compliance; it’s about credibility. It’s about showing that, while we welcome foreign investment, we do so on our terms, in line with our national interest. It’s about ensuring that Australian assets – especially those central to our technological, military and economic future – are not quietly absorbed into the strategic plans of foreign powers.
Global collaboration is not dead but the era of naïve globalisation is over. International affairs must be undertaken within a framework of rules, with sovereignty, based on working with trusted and reliable partners, the primary national principle. Australia is now operating in an environment defined by geo-economic competition, state-backed capital and strategic interference. As the Northern Minerals case shows, holding the line won’t be easy. But, having drawn the line, if we’re to build a secure and sovereign critical minerals sector, enforcing it is essential.
Dr John Coyne is director of the Australian Strategic Policy Institute’s national security program. Justin Bassi is ASPI executive director.
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