The term ‘friend-shoring’ would be used much more in diplomatic conversation if Dr Vlado Vivoda from the independent centre for social responsibility out of the UQ-based Sustainable Minerals Institute had his way.
Dr Vivoda (pictured above) was speaking at the Critical Minerals Energy Investment Australian Conference in Brisbane.
Friend-shoring is a supply chain strategy that involves relocating production to allies instead of competitors.
In strategic terms, the United States’ friend is Australia. The competitor is China.
The positive message from Dr Vivoda is that the new US administration is not likely to affect trade in critical minerals with Australia. There are no indications of a change in direction from the Democrat-led Inflation Reduction Act which hosts the policy.
Exports of Australian critical minerals and rare earths to the US were coming off a low base, and Dr Vivoda called for strategic intervention in these markets.
“So, moving beyond extraction so we can attempt to secure US financial backing via the defence apparatuses such as the Defense Production Act, AUKUS and the MSP, (mineral security partnership), to scale up our onshore processing and refining of critical minerals.
“Connect them to US supply-chain, but not export them to China for manufacturing … keep them within the MSP alliance, prioritise midstream development to capture more economic value rather than exporting raw materials.
“Pretty straightforward. Push for some long-term offtake agreements with US defence again and technology sectors to create demand certainty for Australian producers …”
Australia needed to strengthen its bargaining position, Dr Vivoda said.
“… Develop a more structured and strategic long-term approach by connecting various policy strategies and partnerships in different industry sectors, from mining, defence industry, advanced tech, so on, at a higher level.
“And moving away from being a junior partner. Demand reciprocal benefits such as access to US technology and so on and so forth.
“Leverage US investment while ensuring Australian control over key technologies, and this is also very important moving forward; establish a formal mechanism within AUKUS to ensure our critical minerals are prioritised in procurement. This is absolutely crucial moving forward.”
The country needed to hedge against Chinese dominance and push for exemptions from US tariffs, Dr Vivoda said.
While the nation needed to export more to the US, it was also important to diversify partnerships away from China and the US.
“India, Japan, Korea, some of the friends, allies and so on … to ensure that our producers are solely dependent on or vulnerable to Chinese market, US policy shifts and partnership,” he said.
“This is something I was thinking about, (a) price stabilisation fund for protecting strategic operations domestically and particularly from short-term price fluctuations.”
The conference winds up today.
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