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Reliable Supply Chains, Defence, Partners and Allies: Shaping a Way Ahead for Australia

Dr Robbin Laird

17 October 2022

During my September 2022 trip to Australia in my role as a Research Fellow of the Williams Foundation, I wrote the report for the September 28, 2022 seminar and engaged in discussions during the month focused on the nature of the challenges facing Australia and the need to shape effective approaches to the direct defence of Australia within alliance contexts.

I had a chance to discuss a number of aspects of these challenges with my colleague Dr. Ross Babbage who is the Chief Executive Officer of Strategic Forum Pty Ltd and a Non-Resident Senior Fellow of the Center for Strategic and Budgetary Assessments (CSBA) in Washington DC.

A key issue which combines both defence and alliance issues is the challenge of ensuring reliable supply chains in the context of the digital age.

The pandemic certainly brought to public attention the fragility of supply chains for Australia and the entire liberal democratic world. And the war in Ukraine has generated a broader energy crisis, notably in the wake of the aversion of many countries and the U.S. Administration to prioritize energy production during a perceived global “climate crisis.”

The first issue which became evident was that the reliance on China for a significant amount of the West’s manufacturing capability left them vulnerable to the 21st century authoritarian states and their political agenda to change the “rules-based order” forged after World War II. With the Western economies eschewing heavy manufacturing in favor of a more environmentally friendly “service economy,” there is a key question of how then the West maintains a viable “arsenal of democracy”?

The energy dependence of Europe on Russia has clearly underscored how not having viable alternatives for basic commodities can undercut Western agendas and policies. Although there is currently much focus on building alternatives in Europe, the continued emphasis on the “climate change emergency” clearly conflicts with a realistic long-term geopolitical energy strategy for all of the allies.

And the Biden Administration’s rapid move away from the American energy independence reduces America’s ability to help allies in extremis. And indeed, when it comes to critical supplies, given the current U.S. trajectory, how much allied sharing will really be possible during a future crisis?

The second issue which we discussed was the way ahead with rare earth minerals and processed metals. Dr. Babbage underscored that Australia has large quantities of many of the key rare earth minerals.

But it generally does not process them; that has largely been done in China. This clearly needs to change, but this requires Australia and her partners to shoulder the key processing opportunities and burdens.

It also means that Australia, her partners and allies need to work through ways to build and sustain relevant supply chains

The third issue is that the Australian government needs to work with a variety of allies and partners, and not just wait for leadership from Washington. This is how he put it: “The slowness on some of the issues in this area means that Australia needs to move rapidly and take the initiative ourselves in developing bilateral or trilateral or multi-lateral alliance or partner relationships.”

He underscored that “we need to get the network of allies and partners working effectively together to improve supply chains. In addition to our discussions with agencies in Washington, we’ve been having discussions with our friends in the region, most notably Japan and South Korea, but also with some of the ASEAN countries and India.

“We are also focused on discussions in Europe because their industrial base is very significant and could play important roles in future Indo-Pacific contingencies. We have our own independent and close relationships with most of these European countries facilitated in part by our own European-origin populations.”

The fourth issue is to expand ways for government to work with industry to ensure that essential supplies are available in a crisis and to ensure that Australia can do all of the important things it needs to do even during a very prolonged crisis.

And Dr. Babbage underscored that innovations being generated by industry in a number of areas to strengthen supply chain robustness also can enhance Australian resilience as well. This is the case, for instance, in rare earth materials, as well as in advanced robotic technologies and some types of smart manufacturing.

Babbage cited the example of an Australian rare earth minerals company, Lynas Rare Earths. They currently have a processing plant in Malaysia which they are closing in the coming two-to- three years. They are currently building a new plant in Australia and a second with an American partner in Texas. They are also modifying and modernizing the conventional rare earth refining process.

He then mentioned another Australian company, Australian Strategic Materials, which has teamed with a South Korean company to develop and put into operation a completely new technology for rare earth mineral processing. This new technology process is much cleaner, less power intensive and cheaper to operate than legacy processing technologies.

The first of this new type of processing plants is now fully operational in South Korea and is supplying Korean and other customers. This company is planning an even larger rare earth mining and processing operation in Australia and is also considering licensing their advanced technologies to allied partners. As a result of these and related developments China may lose its dominance of the rare earths industry during the coming decade.

Put another way, shaping a way ahead for the defence of Australia is much broader than buying a new platform for the ADF.

It is now also about the ecosystem for strengthening the supply chains that foster Australia’s prosperity as a functioning society and also the country’s security and that of its allies and security partners.

The pandemic provided a hammer blow; the war in Ukraine triggered a global food and energy crisis; and the two together made it very clear that defense against a multi-domain power like China is not simply about winning the next battle with powerful military forces.

It is also about being able to prevail in a struggle for national and allied survival.

The featured graphic: Australian Supply Chains: State of Play. AUSTRALIAN CEO SURVEY 2021-2022.

Link to article Dr Robbin Laird, Reliable Supply Chains, Defence, Partners and Allies: Shaping a Way Ahead for Australia (DefenseInfo) 17 October 2022


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