Australia reinforces ties with China

In July, Australian Prime Minister Anthony Albanese travelled to Beijing for a weeklong diplomatic trip to attend discussions with China president Xi Jinping.

The visit was an opportunity to continue advancing Australia’s security and economic interests. Management of this relationship is crucial for Australia’s future prosperity and for the security of the nation and the region.

The centrepiece of the visit were meetings with China’s most senior leaders in Beijing. Prime Minister Albanese held his fourth meeting with President Xi Jinping, met Premier Li Qiang for their third annual leaders’ meeting and had his second meeting with Chairman Zhao Leji of the National People’s Congress.

Prime Minister Albanese and Premier Li announced a review of the ten-year old China Australia Free Trade Agreement, the basis of Australia’s trade arrangements with its largest trading partner. The Review will allow industry and the community to share views on how to improve the agreement.

In Shanghai, the Prime Minister met leading businesses from Australia – as part of a Business Council of Australia delegation — and China to discuss development of our economic links and in Beijing, the Prime Minister and Premier Li participated in the 8th Australia-China chief executive roundtable and witnessed the signature of bilateral arrangements to progress cooperation in trade, agriculture and tourism.

“A stable and constructive relationship with China is in Australia’s national interest,” Prime Minister Albanese said.

“We will cooperate where we can, disagree where we must and engage in our national interest.”

In the midst of fluctuating global trade tensions, diplomatic discussions between Prime Minister Albanese and China leaders centred around finding common ground between both nations on sensitive topics including decarbonisation and critical minerals.

“Australia and China’s iron ore and steel sector partnership has contributed to both countries’ economic development for decades,” Prime Minister Albanese said.

“Australian miners are reliable and stable suppliers of iron ore, responsible for almost 60% of China’s iron ore imports.

“That iron ore goes into Chinese steel production which accounts for over 50% of global supply.”

Green steel future

Decarbonisation and green energy were prominent topics across bilateral discussions with both countries expressing interest in increased collaboration.

To meet global decarbonisation goals, as outlined in the Paris Agreement, steelmaking value chains and key players are assessing decarbonisation opportunities.

To surmount the challenges presented by decarbonisation countries, including Australia and China, look to develop enabling policy environments, encourage investment in renewable energy and foster collaboration across academia, industry and government.

As China looks to diversify its sources of green materials and scale its climate transition, Australia is well-positioned to be a consistent, honest and resource-rich partner.

During talks, green iron was a standout area that was backed by a steel decarbonisation roundtable that featured Australia’s four largest iron ore producers and representatives from China’s biggest steel mills.

The Australian sector, represented by, Fortescue (ASX: FMG), BHP (ASX: BHP), Hancock Iron Ore and Rio Tinto (ASX: RIO), expressed eagerness to meet China’s rising demand for green iron ore products.

This cooperation is an opportunity for Australian companies to increase their prominence in the global value chain by integrating renewable energy technologies into operations.

Recognising the importance of this trade, Prime Minister Albanese and Premier Li announced the establishment of a new Policy Dialogue on Steel Decarbonisation that will further back in industry-led efforts.

Company representatives included Fortescue executive chairman Dr Andrew Forrest, BHP Australia president Geraldine Slattery, Rio Tinto chief executive Kellie Parker and Hancock Iron Ore chief executive Gerhard Veldsman.

“Going hard into green steel, the biggest single industrial leader in the world, and hard into green iron ore — chasing that tail — is incredibly important for all peoples, all peoples’ children and, most of all, for the employment drive and for the people of Australia and China,” Dr Forrest said.

Resource companies operating in green energy, project development or sustainable infrastructure stand to benefit from co-investment opportunities, technology partnerships and a broader policy alignment surrounding net-zero targets.

Fortescue, one of these forward-thinking companies, continues to progress its ambitious green metals projects, including its hydrogen-based green iron pilot plant at its green energy hub in the Pilbara, WA.

Hancock Iron Ore has partnered with the Australian Heavy Industry Low-carbon Transition Cooperative Research Centre across many projects focused on developing low-carbon processing technologies suitable for Pilbara ores.

Collaboration between Australian and Chinese partners are also set to propel the future of green steel and Australian iron ore.

Existing partnerships include Rio Tinto’s work with Shougang to optimise steelmaking processes and BHP’s initiatives with HBIS and Baowu, including the successful commercial scale direct reduced iron trial using Pilbara iron ores.

“While Government has an important role to play, we know it will be industry that drives the major developments to decarbonise the sector,” Prime Minister Albanese said.

Critical minerals

China’s dominance in critical minerals is no secret, particularly in refining and processing. The country’s position can be attributed to decades of investment into the sector.

As Australia looks to advance its capabilities within the sector and diversify its supply chains, discussions focusing on building stronger relationships with China and its leading critical minerals sector continue.

Federal Resources Minister Madeleine King says Australia’s resources sector has worked hard over decades to carve out a leading role as a globally significant producer of the minerals and metals that the world needs.

“The resources sector has for decades invested in innovation and productivity enhancement, which has helped to cement Australia’s position as a global resources powerhouse,” Minister King said.

“The resources sector is among the most productive sectors of the national economy and the insights from this sector will help shape key questions on national productivity.

“Australia’s critical minerals sector faces unique set of circumstances to scaling up their operations and securing investment.”

AI and employment

The topic of AI also emerged as a strategic priority for both countries during discussions. Beyond its commercial application, regulations and ethics surrounding the use of AI was the focus.

Both China and Australia explored expanding research and development, in collaboration between university and industry, particularly in autonomous vehicles, predictive analytics and resource management.

As Australia is a world leader in applied research, especially in the resources sector, it is well positioned to leverage AI collaboration with China, a leader in digital infrastructure and development.

Partnership could enable Australian technology companies to test AI solutions at scale and push innovation throughout the industry. Engaging in regulatory and governance conversations could also position Australian innovators as trusted and capable of navigating complex global environments.

“[Fortescue] is deeply concerned about the impact of artificial intelligence on employment all over the world,” Dr Forrest said.

“It emphasises the importance we’ve seen in Australia and China to make sure that new industries, incredibly beneficial for the economies of both countries, also drive employment in both countries.”