New Zealand has been making some big moves on the world trade stage recently.
One of them is a possible minerals deal with the United States.
The US is pushing to loosen China’s grip on critical mineral processing by building alternative supply chains, thereby reducing dependence on Beijing for rare earths and other key minerals used in renewables, EVs, and other technology.
BusinessDesk’s Dileepa Fonseka told The Front Page that the US and others could then potentially use tariffs to enforce a price floor for these minerals so prices can’t be pushed too low by one dominant supplier.
“You don’t know what the prices are going to be. If you look at the prices, they’ve been pretty volatile over time, and the US is also saying that they’re going to plough money into investment,” he said.
Late last year, the US and Australia signed a landmark bilateral framework on critical minerals, which would see both countries “achieve resilience and security” in their critical minerals and rare earths supply chains.
Each country will provide $1 billion in investment towards a US$8.5 billion pipeline of priority critical minerals projects over six months.
A price floor, Fonseka said, was meant to give countries confidence that, if they opened or expanded mining or refining, they would at least get a predictable minimum price back over time.
“We are talking about creating an alternative. Because at the moment, the free market is cornered, and we are not comfortable with that.
“I think that would be an issue even if there weren’t these geopolitical issues happening with China. And that’s perhaps one element I think hasn’t been really well communicated by a lot of New Zealand leadership.
“That this does not necessarily have to be a debate about China because, in any situation where you’ve got all of your minerals concentrated in one place, there are issues.”
Prime Minister Christopher Luxon has emphasised that a deal with the Americans wasn’t a “fait accompli”, but that New Zealand was “going to need support” to kickstart a critical minerals sector.
“We’re not like Australia, that’s had [critical mineral mining] well-established for some time and had it available and have had a well-established business and sector,” he said.
But while talks are underway, he’s had to address criticism of the fast-track panel, which announced a preliminary rejection of a bid for seabed mining off South Taranaki.
Trans-Tasman Resources had proposed to extract 50 million tonnes of seabed each year for 30 years to mine vanadium.
The panel’s preliminary decision said the project would bring a credible risk of harm to marine life and the surrounding environment.
Minerals Council chief executive Josie Vidal has said the decision was “a little bit embarrassing”, given that officials have been touting New Zealand’s place in the global mineral supply chain.
“That’s New Zealand’s end of the debate,” Fonseka said. “Because while we’re having the critical minerals debate, we’re actually having a parallel debate about whether we should be mining and where. How much do we want to do? What kind of value are we going to get out of it?”
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The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5pm. The podcast is presented by Chelsea Daniels, an Auckland-based journalist with a background in world news and crime/justice reporting, who joined NZME in 2016.
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