(Bloomberg) -- Australia is vowing more assertive scrutiny of foreign investments in key commodities tied to electric cars and clean energy, in a potential warning to China which currently dominates the market.
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Treasurer Jim Chalmers has asked Treasury to work with the Foreign Investment Review Board and a range of other stakeholders to undertake a review of foreign investment in sectors like lithium and rare earths, he told a conference in Sydney on Friday.
"We'll need to be more assertive about encouraging investment that clearly aligns with our national interest in the longer term," Chalmers said in his speech.
While Chalmers didn't directly identify China investment as a target of the review, Resources Minister Madeleine King said in a speech earlier this month that the Asian nation's dominance of the market had led to "inherent vulnerabilities of concentrated supply chains."
Australia's latest move adds to a broader push against China's dominance of battery metals and renewable energy technology following moves by President Joe Biden aimed at limiting the nation's influence on key supply chains. Canada last month strengthened its rules around foreign investments in the sector and ordered three Chinese firms to sell their stakes in a trio of lithium explorers.
Australia, which has some of the world's largest deposits of the resources vital in clean energy, military technology and advanced computers, has been working with the US to build its capacity in mining and processing of lithium and other critical minerals. Biden has offered incentives to boost domestic production, and called on allies to bolster processing capabilities.
Ganfeng Lithium Group Co. and Tianqi Lithium Corp. -- China's top two lithium producers -- both hold stakes in key operations in Australia. Ganfeng holds 50% of the Mount Marion mine, while Tianqi controls the Kwinana refinery and a share of Western Australia's Greenbushes, the world's biggest lithium mine.
In February, China-based Shenghe Resources Holding Co. added a 19.9% stake in Peak Rare Earths Ltd., a Perth-based developer of projects in Africa and the UK.
Read more: Breaking China's Grip on Rare-Earths Markets a 'Pipe Dream,' Australia Says
Resources Minister King told Bloomberg in October there has been interest in the sectors from investors in the European Union and from partners including South Korea.
While noting discussions among lithium-producing nations in South America on a possible agreement on production and pricing, and in Asia on a similar set up for nickel and other key battery minerals, Chalmers ruled out Australia's potential involvement in creating an "OPEC-like" set up for critical minerals.
Indonesian Investment Minister Bahlil Lahadalia earlier this month floated the idea of alliance of nickel suppliers that he said would help to unite government policies on the in-demand battery metal. The plan had been discussed with both Canada and Australia.
"Rather than locking down supply chains and trying to create an OPEC-like set up for critical minerals, we'd be better off responding by diversifying global supply chains and making them more resilient," Chalmers said.
(Updates with Resources Minister King's comments in fourth paragraph)
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