Even Out of China's Hands, Mines Still Rely on Its Equipment

The landmark critical minerals agreement between Australia and the United States is vital to both nations’ security and sovereignty. Like AUKUS, it is about competing with China.

This issue extends across the minerals industry, not just rare earths. The challenge is ensuring the operational technologies that enable extraction, refining and manufacturing are sufficiently diversified and secured.

Big deals with China by Australian companies BHP and Fortescue are examples of how mining companies outside China are becoming increasingly dependent on it.

The critical minerals agreement signed on 20 October committed to intensifying cooperative efforts in securing supply of these materials that are essential for the modern economy, especially in the energy transition, and for defence technology. Australia and the US also said they would deter asset sales in the industry, presumably including deposits.

Its aim was to reveal such leverage that other nations would accept that compliance, not competition, with China was the only viable approach.

That misuse of market power, ahead of a 20 October meeting between President Donald Trump and Prime Minister Anthony Albanese, and Trump’s meeting with President Xi Jinping on 30 October, continued Beijing’s approach of military assertiveness and economic coercion to pressure nations into choices that advance China’s strategic objectives at the expense of their own interests.

Last month we also saw it threaten retaliation unless Britain let it build a mega embassy in London, and there’s been bullying of the Netherlands in relation to the intellectual property of tech company Nexperia, aggression against the Philippines and Taiwan, and yet another unsafe release of flares by Chinese aircraft against an Australian plane in the South China Sea.

This shows that every new dependency—no matter how commercially attractive initially—risks increasing strategic vulnerability.

This is why it is noteworthy that China is increasingly a dominant source of the operational technologies vital to mining—the systems that control, automate and monitor industrial processes. Like telecommunications equipment, operational technologies are networked, remotely managed and reliant on software, firmware and data platforms—in China, in these cases.

The security risks are familiar, echoing those seen in the 5G debate. They relate to foreign adversaries’ abilities not only to spy but to disrupt access or supply, as control systems are physically embedded in mines, refineries and logistics networks and often govern core industrial processes. A key difference is that a rip-and-replace approach, where risky technologies are removed entirely, is easier with mining operations technology than with backbone telecommunications infrastructure.

Removing Chinese or other untrusted components, while difficult, is possible, though it comes with costs, including the need to halt production, retrain staff and rebuild entire operating environments. But even if there is a lower consequence of sabotage or compromise in this context, real cybersecurity vulnerabilities remain. Importantly, so does a high risk of strategic dependency. The same risk should have the same solution: derisking and diversification to trusted partners.

Otherwise, it is the equivalent of building a fleet to sail independently while relying on the very nation you’re trying to steer away from to supply the navigation systems.

How feasible is a Chinese government ban on technical support for operations technology used in our mines? It would in fact be in keeping with the onerous rare-earths licensing restrictions announced on 9 October.

To be clear: Australia, the US and key partners, such as Japan, South Korea, Canada and European countries, cannot decouple completely from China in extraction or processing of minerals, including critical minerals. To some degree, the same is true with Chinese operational technology. Such technology from China, because of state-backed industrial policies and concessional financing, is too competitive to ignore. In some instances, it also sets the pace for the changing technological frontier. But this means we need at least to see through the illusion of how short-term savings are blinding us while we embed long-term strategic dependencies—those that will be far costlier to unwind.

So, in mining, the task is to build resilience and redundancy—not exclusion—reducing our dependency far enough so it cannot be weaponised.

This means having mines and processing facilities that rely on a sufficiently diverse mix of operational technology suppliers. We need to balance China-sourced equipment with equipment from trusted vendors—from manufacturers that may indeed need a ring-fenced market to survive against China’s powerful and predatory industry policies.

In several industries where we’ve seen reliance on Chinese battery and component supply chains, such as Europe’s automotive sector or even Tesla’s electric vehicles, China’s industry policies have achieved the objective of leaving foreign manufacturers struggling to re-establish domestic or allied alternatives. The key is to not let the same thing happen in mining.

An initiative of the mining company Fortescue, led by Andrew Forrest, embodies both the promise and peril of using China’s mining technology. Fortescue has a visionary plan to decarbonise its operations in Australia’s northwestern Pilbara region by making green steel and using battery-electric mining vehicles from 2026. But this rests heavily on Chinese technology.

The company has placed large orders for Chinese-made equipment, much of it running on Huawei’s 5G Advanced (5G-A) control systems, which are upgraded versions of technology excluded from Australia’s telecommunications networks. Huawei’s 5G-A is a subscription-based intelligent mobile network service that underpins China’s smart-mining strategy, enabling vehicle autonomy and integrated sensing.

Fortescue’s partnerships with Chinese entities now include equipment manufacturing. In April 2024, it opened its first automated electrolyser plant, in Gladstone, with Chinese intelligent-equipment supplier Wuxi Lead. In November 2024, Fortescue awarded a US$400 million contract to heavy-machinery maker XCMG—which has known links to China’s military—for electric mining equipment for Pilbara operations. Another agreement between the companies, in September 2025, was larger, reported as a ‘historic billion-dollar fleet deal’ and the largest green mining equipment deal in history.

For its part, BHP signed a strategic framework agreement with XCMG in June 2025 for joint equipment development. In July it struck side deals with electric-vehicle specialist BYD and battery maker CATL to explore battery solutions for BHP mining—in equipment, locomotives, fast charging infrastructure and industrial battery storage and recycling—despite CATL’s reported links to forced labour in Xinjiang.

A partnership between XCMG and Huawei on smart mining aims to increase adoption of Huawei’s 5G-A networking, industrial control and sensing technologies.

There are indications China is fusing industrial automation with strategic objectives. Chinese military supplier Aerospace Science and Industry Heavy Engineering Equipment Co Ltd has developed robotic trucks for mines. More generally, vehicle autonomy suited to rough conditions has obvious military applications.

While not so much a risk for critical minerals, parts of our broader mining industry are also increasingly leaning on China for finance. This suggests tomorrow’s challenge for the mining industry—less so for rare earths specifically—is safeguarding the financial and commercial infrastructure that sustain the same operations.

In August, Fortescue secured a record 14.2 billion yuan (around $3 billion) syndicated term loan led by Bank of China and ICBC—the largest offshore-yuan facility ever extended to an Australian firm.

Around October, BHP was reportedly in talks with China Mineral Resources Group to settle up to 30 percent of its iron-ore sales in yuan—a shift that, if true, would deepen China’s financial influence over Australia’s most valuable export commodity.

Together, these developments reflect a coupling of Australia’s mining sector with China’s technology, finance and industrial ecosystems.

A global collective of countries is needed to respond. Crucially, the new Australian-US critical-minerals agreement creates a framework for extraction and processing that includes coordination with trusted partners, such as Japan, South Korea and the European Union. It complements parallel initiatives with Canada and India under the G7 Critical Minerals Action Plan—signed by the US and endorsed by Australia in June 2025. While the language remains broad and stops short of detailing specific instruments, such as back-to-back offtake agreements or pricing mechanisms, the significance lies in the willingness of governments to intervene.

So, it provides a template for aligning investment, standards and supply-chain assurance across trusted partners—a framework that should be replicated across the rest of the critical-minerals ecosystem, from operational technology to logistics.

The scope and impact of dependency on Chinese technology in critical minerals—and indeed all minerals—should neither be ignored nor assumed.

The specific areas and the extent of dependency can be identified and the effects of China using them against us can be mitigated. This does not require blunt exclusion in all cases. But it does require governments, trusted international partners and companies to build shared data-driven platforms to pinpoint where dependencies on China are forming across critical industrial systems.

This is why the Australian government would benefit from reviewing where and to what extent concentration across Australia’s mining sectors is reaching coercive or monopolistic levels. This enables policy action to be calibrated to where there’s most harm and supports the follow-on work with partners to design and implement diversification pathways as needed.

Without coordinated action, Australia’s success in securing resources in the ground risks being quietly undermined by vulnerabilities built into the systems that enable it above ground.

Justin Bassi is executive director, James Corera is director of the Cyber, Technology and Security program and Tilla Hoja is a China analyst at ASPI.

This article appeared originally at The Strategist (ASPI).