Posted: 2024-06-18 05:04:22

Cute and cuddly pandas might have dominated the headlines when the Chinese Premier visited South Australia, but the only other state Li Qiang is visiting has bigger ambitions.

"I'll take economic-boosting direct flights between Shanghai and Perth any day over pandas," WA Premier Roger Cook told reporters with a chuckle on Monday.

Boosting the state's economy, and therefore the nation's, is the name of the game for Cook.

But it's not about flights or pandas or even lifting trade impediments on rock lobster (an issue hinted at by featuring the crustacean at a community banquet).

A close-up shot of a plate of WA lobster, on a dinner table with a placard showing Chinese writing at a community banquet.

WA lobster was on the menu at a community banquet in Perth held for the visit of Chinese Premier Li Qiang.(ABC News: Keane Bourke)

It's about what was packed in the rows and rows of white bags which greeted Premier Li in the industrial hub of Kwinana south of Perth — lithium, as well as other critical minerals.

The hope is those minerals will deliver the next boom for Western Australia, replicating the success which has flowed from the iron ore buried beneath the state's unforgiving and expansive surface.

White bags of minerals line a factory floor

Lithium hydroxide bags line the floor of this warehouse in Kwinana, visited by Li Qiang.(ABC News: Keane Bourke)

Last year, WA received about $8 billion in royalties from iron ore exports to China — accounting for about a fifth of the state government's bottom line.

But as China's construction ambitions temper, the focus is shifting to resources like lithium, nickel, cobalt, manganese and other minerals — which WA has in spades — and which are needed for everything from electric vehicle batteries and smartphones to wind turbines.

We dig them out, China processes

Luckily, it's got a captive buyer in China, according to national president of the Australia-China Business Council, David Olsson.

Chinese supporters carrying Australian flags stand in a group in Kwinana with an industrial plant behind them.

Chinese supporters outside Tianqi Lithium's Kwinana plant, in Perth's south.(ABC News: Keane Bourke)

"China's going through an economic process of decarbonisation of its own economy," he told the ABC's AM program.

"It's a major driver of much of its economic growth going forward, and the development of value chains and supply chains associated with the decarbonisation of the economy.

"Australia is blessed with large deposits of these critical minerals, which is essential to the green economy, so China will be looking to shore up its supply chains so that it gets as much access as it is able to."

Protesters carrying signs surrounded by police.

Protesters also attended the event at the lithium processing plant in Perth.(ABC News: Keane Bourke)

That's where the tension lies for Australia which, on the one hand, stands to benefit significantly from building new trading relationships with China around these new minerals.

But given their importance to so much of our daily lives — not to mention military uses — national security considerations are quickly coming into play.

Foreign Minister Penny Wong alluded to that tension on the weekend, speaking about the government generally welcoming foreign investment.

A middle-aged woman of Chinese descent shakes hands with a middle-aged Chinese man in front of a panda enclosure.

Penny Wong met with Chinese Premier Li Qiang this week.(AAP Image: Asanka Ratnayake)

"We have also said there will be areas where we'll pay particular attention to national interest considerations. Critical minerals is one of them," she told Insiders.

The concern is what the head of the Perth US-Asia Centre, Gordon Flake, is China's "extreme" monopoly over the processing of the minerals.

We can dig them out of the ground here in Australia, but being able to use them currently requires China's involvement.

"This is the basic economics 101, trying to avoid monopolies, and we're pretty close to a monopoly right now," Flake told AM.

"There isn't a call for the government to take over the industry, but to at least carve out a percentage of that supply chain so as to deny China the capability of monopoly behaviour.

"To ensure that at least for national security applications, for core communications applications, that we are not dependent on a single source, but that's a big, big lift."

Li Qiang laughing and pointing his left finger skywards, as a security guard scowls at a photographer.

A large security presence accompanied Premier Li in Perth.(ABC News: Keane Bourke)

It's why there was $7.1 billion for critical minerals in the latest federal budget, on top of other measures.

But money alone won't be enough, with China the home of much of the necessary expertise, which mining analyst Peter Strachan said means processing projects were taking longer-than-expected to get up to capacity.

"The problem in this area is that prices have been really controlled by the Chinese because they can push the price down and just make Australian developments uneconomical until such a time as they're sort of bleeding from every orifice," he told the ABC's AM program.

"And then they have to come to the Chinese to get support and get into the market."

'Very delicate dance'

Flake agreed, saying there was only one commercial-scale rare earths processing facility outside of China.

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