At a time when global supply chains exacerbate economic resurgence and security threats, the Australia-India partnership on critical minerals has become a strategic relationship with implications for the market dominated by China in the processing and supply of these minerals. Utilising Australia’s plentiful deposits of minerals and India’s surging industrial needs, this collaboration is shifting the dynamics of ‘supply chains everywhere’, driving diversification and shaping China’s position in the global green transition.
Critical minerals, including lithium, cobalt, graphite, and rare earth materials, are crucial for renewable energy technologies, electric vehicles, and high-tech industries. China dominates the world’s supply chains. According to the International Energy Agency’s 2024 report, China accounts for more than 60% of the production and over 80% of the processing capacity of rare earths. Yet Australia, which boasts the world’s largest reserves of lithium and second-largest of cobalt, and India, which has aspirational clean energy goals (500 GW of non-fossil energy by 2030 and net zero by 2070), are partnering to create new mineral supply routes, possibly limiting reliance on China’s processing stranglehold.
Australia-India alliance drives innovation that can have ripple effects on China’s participation in the critical minerals landscape. Australia’s leadership in sustainable mining, including the CSIRO’s 2024 vision, provides the other side of the coin, as India pushes for sustainable minerals processing in the context of the NCMM
The Australia-India Economic Cooperation and Trade Agreement (ECTA), which came into force in December 2022, has also enabled this transition, including by slashing tariffs on essential minerals (manganese, copper, cobalt, and nickel). From April 2023 to 2024, India imported $11.02 billion worth of mineral fuels, oils, and related products from Australia, which was more than in previous years. This increased trade, along with strategies like the Australia-India critical minerals investment partnership, allows India to invest in Australian mining projects, with India’s ‘Make in India’ initiative, and meet Australia’s aspiration to become the global leader of critical minerals by 2030. For China, this amounts to new competition in a market where it has long been the dominant provider to both nations, especially for processed minerals.
However, boosting this framework is the launch of India’s National Critical Mineral Mission (NCMM) in April 2025, which intends to diversify demand away from China through domestic exploration and international alliances. For example, the cooperative efforts with Australia in 2022, a Memorandum of Understanding (MoU) was signed on lithium and cobalt projects, and the 2023 joint venture due diligence initiative was launched between India’s Khanij Bidesh India Ltd (KABIL) and Australia’s Critical Minerals Office (CMO), which focused on building alternative supply chains.
The Australia-India tie-up will be centred on advanced processing and recycling technologies to develop cost-competitive alternatives to China’s existing processing base. Although China is the industry leader in refining such technologies, this tie-up is expected to spur research and development in India
Geopolitically, the Australia-India partnership mitigates supply chain risks triggered by China, for example, when it banned exports of rare earths to Japan in 2010, and gallium and germanium by 2023. While not specifically aimed at China, they highlighted the desire for more diversified supply chains, a common goal of Australia and India. For China, this collaboration may alter market dynamics as India’s rising processing capacity and Australia’s exports of raw materials boost new supply hubs.
Australia-India alliance also drives innovation that can have ripple effects on China’s participation in the critical minerals landscape. Australia’s leadership in sustainable mining – including the CSIRO’s 2024 vision – provides the other side of the coin as India pushes for sustainable minerals processing in the context of the NCMM.
In terms of collaborative research and development, as outlined in the 2022 Australia-India MoU, it will be centred on advanced processing and recycling technologies to develop cost-competitive alternatives to China’s existing processing base. Although China is already the industry leader in refining such technologies, this partnership could spur research and development in India to remain on the cutting edge, particularly as worldwide demand for responsibly sourced minerals increases.
Regional frameworks such as QUAD and the Mineral Security Partnership (MSP), which include both Australia and India, further amplify the global impact of the tie-up. These efforts also advance diversified and resilient supply chains, indirectly reducing the dependence on any single source. It also indicates to China that it must adjust to a more competitive environment in which its potential position as the primary source of vital minerals is not guaranteed. However, it also unlocks possible areas of cooperation because the Chinese could well see an interest in working with both Australia and India in triangular arrangements to secure stability in the global supply chain.
Some challenges may reduce the effects of the partnership on China. Geopolitical risks and protectionist measures, including potential US tariffs, may disrupt worldwide trade flows, which in turn could indirectly affect China’s export markets. India’s race against China for African mineral resources may also get heated
There are still challenges that could affect the partnership’s influence on China. Geopolitical risks as well as protectionist measures, including potential US tariffs, might disrupt worldwide trade flows, which in turn could indirectly affect China’s export markets. India’s race against China for African mineral resources may also get heated, and both countries may have to negotiate difficult diplomacy. Enhancing Australia-India mechanisms, including mineral processing and export-credit support coordination, could further improve their market position and may force China to pursue collection rather than competitive measures.
Lastly, by pairing Australia’s natural resources with India’s industrial centres, it diversifies supply chains, encourages innovation, and advances sustainability. Not a challenge meant to destabilise China, the project adds competitive and resilient features to a market in which China has long been the dominant player. Amid the rising global demand for critical minerals, such collaboration places Australia and India at the forefront, which in turn may force China to adjust to the new paradigm in the competitive and diversified global context.
The writer is Special Advisor for South Asia at Parley Policy Initiative, Republic of Korea. He is a regular commentator on the issues of Water Security and Transboundary River issues in South Asia. The views expressed are of the writer and do not necessarily reflect the views of Raksha Anirveda
