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If Australia and like-minded nations want secure, sustainable critical-minerals supply chains, they must tackle the interrelated challenges of price premiums and global environmental, social and governance (ESG) standards.

Australia and its miners are leaders in ESG performance in mining. Meeting high standards, however, costs more than working to lower ones.

Without minimum production standards, it’s hard, nigh impossible, to compete in critical-mineral markets flooded with products that are cheaper but come with inferior ESG compliance. This is not an argument for a reduction in Australian standards but for treating products that don’t meet minimum benchmarks as inferior and to be sold at a price discount.

Many agreements have been signed by like-minded nations to build more diverse supply chains than those currently dominated by China. Australia and its allies have committed to promoting high ESG standards for supply chains and agreed to explore how to achieve market price differentiation. For example, a May 2024 agreement between Australia and the European Union includes provisions for supply-chain transparency and promoting ‘market recognition for high ESG standards’.

As a recent ASPI report explained, there’s no common global standard for the sustainability of minerals supply chains or the ESG performance of miners. A recent proposal by several global companies for the London Metals Exchange (LME) to introduce a ‘green premium’ for nickel produced under high ESG standards failed for want of agreed standards and industry consensus.

The LME noted there were no common industry views about what should constitute ‘green nickel’ and that any standard to underpin premium pricing would have to cover everything from carbon footprints to labour rights. But why would there be such agreement when low standards are part of the business model for critical-minerals production in some countries, such as China and, for nickel, Indonesia? Buyers tend to be swayed by price as a primary consideration for supply.

Meanwhile, the suspension of much of Australia’s nickel production due to undercutting in the market by Indonesian production, backed by Chinese capital, has concentrated global supply while worsening environmental and social impacts.

Indonesia’s own attempts to diversify minerals investment away from China appear to be coming unstuck due to market conditions and poor ESG standards. In June, German company BASF and French company Eramet abandoned plans to develop a nickel–cobalt refining complex in Indonesia’s Weda Bay, North Maluku, citing availability of alternative supply chains to access ‘a secure, responsible and sustainable supply of critical raw materials for the production of precursor cathode active materials’.

So far, governments have largely left the development of ESG standards to industry, implicitly recognising that it’s the mining industry and downstream processors that have the incentive and expertise to develop standards.

While global consensus on standards will be difficult to achieve, more challenging will be establishing assurance mechanisms that critical-minerals supply chains meet the standards. Standards require government endorsement, but effective and trusted assurance mechanisms will need government-backed oversight and warranties.

Multiple global mining industry standards have been developed since 1997, when the Minerals Council of Australia (MCA) issued its Code for Environmental Management. (I was a co-author of the code). Those standards tend to apply to upstream extraction and primary and secondary processing, however. Few apply to the full minerals supply chain.

Several processes are underway to rationalise minerals supply standards, but not all appear to be coordinated, potentially continuing current fragmentation.

The Consolidated Mining Standard Initiative seeks to combine five mining industry standards into one global standard: the copper industry’s Copper Mark, the Mining Association of Canada’s Towards Sustainable Mining (also adopted by the MCA), the Mining Principles of the International Council on Mining and Metals, and two standards of the World Gold Council.

The Initiative for Responsible Mining Assurance is revising its 2018 Standard for Responsible Mining and Mineral Processing and a separate chain-of-custody standard for release by the end of 2024.

The Responsible Minerals Initiative, which has members from manufacturing, mining and processing, has developed the Global Responsible Sourcing Due Diligence Standard for Mineral Supply Chains, as well as standards for the processing and refining of several minerals.

The principal government-linked processes to facilitate the development of standards are conducted by the Organisation for Economic Co-operation and Development, which in May 2024 held its 17th Forum on Responsible Mineral Supply Chains, bringing together 1300 global industry, community and government representatives to discuss policy cohesion and responsible business conduct.

In 2016, the OECD issued the third edition of its Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas, which has great relevance due to the rapid development of critical-minerals mining operations in several such African and Latin American nations. The OECD has also produced guidelines on environmental due diligence in mineral supply chains and on responsible business conduct.

How those OECD discussions and guidelines are to be translated and articulated with industry initiatives to produce globally accepted standards is unclear, but it needs to happen to achieve the critical-mineral supply-chain objectives of like-minded nations.

If new standards are agreed and recognised by governments, assurance mechanisms must be implemented with government backing and oversight.

Common standards and assurance mechanisms will provide an essential foundation to achieve differential pricing for responsibly produced minerals.

However, it will be very difficult to gain price premiums or to impose discounts for minerals not produced sustainably. Government subsidies via concessional loans or production tax credits are short-term and inadequate substitutes for market-driven pricing that meets full costs and margins. In any case, countering China’s willingness to manipulate markets that it dominates by withholding and dumping supply requires systemic global responses. For Australia, out-subsidising United States domestic production of minerals such as lithium is unlikely to be economically feasible and in any case is pointless.

It remains to be seen whether and how industry and governments can achieve differential prices for sustainably produced critical minerals that are needed to support their often higher costs. One thing that’s certain is that, without market demand for ESG standards, neither industry nor government will have much sway in promoting sustainable supply chains.

If China sets up the first permanent Moon base, it could easily upend the US-sponsored Artemis Accords on lunar colonisation and take control of part of the Moon. Its behaviour in Antarctica already shows how.

In 2020, the United States, together with its key partners in space exploration, drew up the Artemis Accords to expand on the provisions of the 1967 Outer Space Treaty. The goal was to create principles that would facilitate the colonisation of the Moon. One of the key provisions of the accords is a licence for lunar operators to establish ‘safety zones’ around their activities ‘to avoid harmful interference.’ While 43 countries have signed the Artemis Accords, China and Russia rejected them and are building alternative frameworks for the Moon race.

But the stalemate under the Antarctic Treaty over China’s 2013 request for an Antarctic Specially Managed Area (ASMA) around its Kunlun Station on Dome A should inform the Artemis Accords. ASMAs are Antarctica’s equivalent of lunar safety zones. The denial of China’s request for an ASMA is now reducing the effectiveness of decision-making in several areas of the Antarctica Treaty System (ATS). Even the simplest of measures to protect the emperor penguin are becoming impossible to achieve.

Deconflicting lunar activities is central to the Artemis Accords because most space exploration programs are targeting the Moon’s south pole, where scientists believe craters could be an excellent water source. With major uncertainties surrounding the distribution of water reserves across the Moon, disputes between rival space powers over colonisation sites is likely. In fact, in 2022 the National Aeronautics and Space Administration published a list of 13 candidate sites for Moon landings by the Artemis program, all near the south pole, and some reports suggest that China is considering some of the same areas.

Under the Outer Space Treaty, no country can reserve or make a territorial claim on the Moon or any other celestial body, but the Artemis Accords’ ‘safety zones’ are the closest any legal agreement has come to establishing some degree of sovereignty or at least autonomy on parts of the Moon. The accords obligate parties to notify and coordinate their activities with the holder of the safety zone.

But, as Michelle Hanlon, director of the Center for Air and Space Law at the University of Mississippi, rightly asks, what if China were to beat the US to the Moon? ‘Then China might say: “You had a great idea of safety zones and we’re here on the south pole where all the water is. We need a 40 km safety zone.” ’

Back on Earth, that is indeed the story of China’s Kunlun Station, which in 2009 became the first station to be placed on Antarctica’s Dome A. That’s the highest ice dome on the Antarctic Plateau and the coldest point on Earth, and it offers the clearest view from our planet of stars in our galaxy. In 2013, China requested the creation of an ASMA to encompass its Kunlun Station as well as its research and monitoring sites. The goal was to give China a greater say in the management of the area. The ATS states that ‘any area, including any marine area, where activities are being conducted or may in the future be conducted, may be designated as an Antarctic Specially Managed Area to assist in the planning and …  coordination of activities, avoid possible conflicts, improve co-operation between Parties or minimise environmental impacts.’

The Chinese proposal has been systematically rejected by the consultative parties to the ATS on the grounds that no other activities are taking place in the vicinity and that the deconfliction question does not arise. China’s response has essentially been to argue that nothing under the ATS rules out a precautionary approach.

The dismissal of its request has been a major source of disappointment for Beijing, since the conquest of Dome A had been viewed with great pride in China. At the time, China’s official Xinhua news agency wrote that ‘while Americans built Amundsen–Scott Station in the South Pole, [and] Russians established Vostok Station in the southern Pole of Cold, China now operates Chinese Kunlun in the highest point of the Antarctic Ice Sheet.’

In the face of repeated objections, China proposed replacing the ASMA with a Code of Conduct for Exploration and Research—a compromise—but consultative parties have been quick to point out that China can regulate only the conduct of its own researchers and that it has no jurisdiction over other Antarctic programs. Since then, China has repeatedly obstructed various unrelated decisions under the ATS.

In total, only seven ASMAs have been designated under the ATS, reflecting the controversy that surrounds them since they are seen as conferring some degree of sovereignty in a continent where all territorial claims have been frozen.

If the Antarctic experience is anything to go by, lunar deconfliction will not be achieved by legal provisions alone. Diplomacy will have to remain central to the management of new frontiers.

Cyber defences can be alert to malware. It’s much harder to be alert to intruders who use the targeted system’s own resources against the owner.

In cybersecurity, such attack methods are called ‘living off the land’ (LOTL), and they’re practiced by the Chinese group APT40, the subject of a 9 July cybersecurity advisory from eight countries, including Australia.

Countermeasures to LOTL are available, but they’re not used widely enough. The main one is looking not for inserted code, since there isn’t any, but monitoring the system for signs that its own features are doing abnormal things.

The advisory mirrored one issued in February 2024 regarding the Volt Typhoon group. Although both groups use complex attack methods, their objectives are distinct: APT40 focuses on espionage, whereas Volt Typhoon appears to be targeting critical infrastructure with little to no espionage value, apparently to sabotage or to prepare to do so in case of conflict. A key similarity between these groups is their use of LOTL techniques to breach large, defended infrastructure, potentially years ago, then quietly lurk on the network.

‘Living off the land’ refers to using built-in command-line tools, programs, processes, trusted network protocols and other native functionalities within a victim’s environment to conduct malicious activities, as opposed to deploying known malware tools or noisy commercial products. LOTL operators such as APT40 and Volt Typhoon exploit tools such as PowerShell, Windows Management Instrumentation and remote desktop services to gain and maintain access to targeted systems. In many cases, tools and network communications have been whitelisted, or are used so often by trusted users that they are not locked down or audited as other tools might be.

Additionally, LOTL requires a hands-on approach, in which attackers manually breach defences and conduct their operations. It must be an approach that’s crafted specifically for the targeted system and uses what’s found within the system. By using capabilities and tools built into the target, attackers can avoid triggering security systems such as intrusion-detection systems that typically rely on matching against known signatures or known behaviours when malware is transferred or executed.

This approach presents significant challenges to defenders and detection, as it enables the attackers to mask their activities within the noise of normal operations.

As APT40’s primary mission is espionage, the group infiltrates networks to steal sensitive data. But Volt Typhoon’s focus on critical infrastructure poses a different kind of threat: by targeting water and power utilities, transportation systems and other essential services, it aims to sabotage and disrupt operations. The use of LOTL techniques in these scenarios exacerbates the challenge, as it allows attackers to lurk undetected within critical systems, possibly for years, poised to strike at any moment.

This underscores the need for advanced defensive strategies. Traditional security tools relying on signature-based detections are insufficient against LOTL-type threats. Instead, organisations should use a multifaceted approach that includes advanced anomaly-detection systems.

Those systems analyse patterns of normal behaviour and flag any deviations that may indicate malicious activity, even when traditional malware is not present. Anomaly detection can be done at multiple levels, from simple network communications, such as a new asset, to a new protocol in use. More specialised solutions can parse the network protocols, inspect them and look for anomalies in usage, such as seeing an approved protocol that’s taking a different action or different direction.

Even more granular is advanced anomaly detection, which looks at how the values, parameters and set points used within those protocols are used. It can thereby determine whether, for example, the speed of a motor is set abnormally high, or a furnace is set to an abnormally hot temperature.

When LOTL attackers bypass security defences without hauling in detectable code, anomaly detection is the next best hope for survival after an incident. In the early phase of attacks, their reconnaissance activities should set off anomaly-detection solutions, regardless of what tool the attackers use.

Second, all subsequent hacking operation activities would trigger anomalies, as the normal activity of regular users usually doesn’t include the same operations that the attackers are doing.

Finally, although it might be a last resort, knowing when the actual critical process, such as a furnace temperature or motor speed, is being tampered with is also within the realm of anomaly detection. In the past, anomaly detection was difficult to deploy in IT systems, but, leveraging artificial intelligence and focusing on industrial control systems, it’s come of age.

Further, organisations should consider enhancing their incident-response capabilities. This should include regular training for IT staff to recognise and respond to potential LOTL activities, as well as implementing robust monitoring and logging practices. By maintaining comprehensive system activities logs, trained organisations can retrospectively identify and analyse suspicious behaviour that may have gone unnoticed in real time.

Most large organisations are dealing daily with breaches, and many security operations centres are busy with daily tickets and incidents. Organisations are in a constant state of recovery. Knowing this, being prepared for a targeted attack from a highly capable nation-state threat is sure to include testing and influencing incident-response and disaster-recovery plans. Tabletop exercises can also expose some of the areas for improvement and expose incorrect assumptions, such as ‘backups are reliable’, or ‘the furnace can safely shut down’.

Australia’s defence planners should carefully weigh the risks posed to its vital maritime trade connections by a persistent Chinese naval presence in the Indian Ocean. Some precautions must be taken now, as the need to deter harassment of Australia’s critical sea lines of communication (SLOCs) in the Indian Ocean isn’t very improbable or far off.

Leaving aside arguments for greater Australian capability to attack enemy ships and submarines, a higher allocation of defence resources to the region may be justified.

So far, China has had limited success in acquiring shore-based replenishment capability to support its warships operating east of Somalia. But it could succeed suddenly by gaining access to key logistic bases and dual-use commercial ports in Africa, the Middle East, Southeast Asia and Indian Ocean island countries.

Meanwhile, upgrades to the Chinese naval fleet make it increasingly suited to distant operations.  Larger, multirole combatants with advanced anti-ship, anti-air and anti-submarine weapons and sensors have replaced obsolescent, generally single-purpose ships. According to a 2020 China Maritime Studies Institute report, China has more than 100 warships and submarines that can operate in the Indian Ocean. This figure is likely to rise as the Chinese navy expands its surface combatant fleet to 435 ships by 2030. The US Navy plans to operate 290 warships by the end of the decade.

If relations with the United States keep declining and if the US-Indian security relationship continues to improve, China will worry about its SLOCs. It could respond by deploying many ships to the Indian Ocean. The same deployment would threaten Australia’s SLOCs.

In an escalated low-level contingency, Australia would have to show its readiness to conduct strike and anti-submarine operations. It would need more reconnaissance of its northern and western approaches and more protection of offshore resources and port and naval infrastructure, including against covert mining. Failure to show resolve would cede the initiative to potential adversary forces and undermine deterrence.

Closer defence cooperation with selected Indian Ocean island countries could check Chinese efforts to gain access to overseas ports and logistic support. The government of Prime Minister Anthony Albanese has pledged to increase Australian Defence Force deployments, training and exercises with the Maldives as well as Sri Lanka and Bangladesh. These are welcome developments upon which the Australian government and Department of Defence could easily build.

Some ways of strengthening Australia’s Indian Ocean defence cooperation can be inexpensive, as suggested by Asia-Pacific Development, Diplomacy and Defence Dialogue’s options paper published in April. Opportunities include the placement of more defence attaches in missions in the region—including the Australian high commission in the Republic of Maldives—and establishing relationships between ADF Reserve units and small island states. The US State Partnership Program, which facilitates cooperation on civil-military affairs, could act as a model to inform the structure, shape and role of an Australian initiative.

Australian military leaders and defence planners should also look to improve proficiency in shipping protection and, if the work hasn’t been done already, develop a suite of maritime trade routing plans. They can look to successful strategies in Australian history, as discussed during the 2019 Goldrick Seminar on Maritime Trade and its Implications for Australia’s Defence. One example given then was Australia’s experience instituting a convoying regimen during World War II to protect Australian merchant shipping against German surface, air and sub-surface (including mining) attack. Another was the comprehensive operational analysis capability of the performance  of the Royal Australian Navy exercise system developed by the RAN Research Laboratory (later incorporated into what is now the Defence Science and Technology Group). In the absence of an overarching maritime security strategy, further work along these lines would help reinforce and make credible Australia’s deterrence by denial strategy.

Australia won’t have to meet potential mid-Indian Ocean security concerns alone, thanks to increasing security cooperation with India and Britain and the alliance with the United States. Moreover, the current plan to expand the surface combatant fleet to 26 major warships from 11 (at the time of the February announcement) will see Australia operate its largest navy since World War II. Australian maritime doctrine and tactics will need updating accordingly. This will be essential to ensure our sailors can deter meaningful threats to merchant shipping and maritime trade if needed.

These measures should form part of a whole-of-nation approach to Australia’s evolving defence policy and planning in the Indian Ocean region. The Chinese navy will no doubt continue to expand its presence and reach in this important geopolitical arena. Australia is taking important first steps to achieving an effective deterrence strategy, but more is needed.

The Central Committee of the Chinese Communist Party has accepted the resignation of one of its own most highly ranked members, former foreign minister Qin Gang, highlighting Xi Jinping’s continuing lack of trust in some of his own hand-picked officials.

Qin’s exit, along with that of other senior officials dismissed from office in the past year, was confirmed on 18 July at a key Central Committee meeting held every five years, known as the third plenum.

Xi’s loss of trust in these senior officials, and allegations of corruption that underlie some of them, sit uncomfortably close to the centre of power in China. It is a situation that likely makes him doubt information and advice he receives on the issues he cares about most. Some, such as military preparedness, leave little room for miscalculation.

Qin mysteriously disappeared from public view in June 2023, was removed from his post at the Ministry of Foreign Affairs in the following month and was stripped of his title as state councillor in October. His fall from grace prompted intense speculation about how someone who was once known as a close aid of Xi and who had risen so quickly in the foreign affairs system could seemingly disappear just as quickly and without explanation. No known charges have been lodged against him, he has not been expelled from the party, and, with his final resignation, in the end he has been let off gently. That leaves room for different interpretations of what has happened.

With a long career in the foreign ministry, Qin was appointed China’s ambassador to the United States in December 2022. Just 17 months later, he became foreign minister. The speed of his promotion appeared to be intended to help ease tensions between the US and China. His disappearance came after he had been in the job for seven months and had reportedly had an extra-marital affair while in the US that resulted in a secret child born with American citizenship.

But Qin is only one of a growing list of senior officials removed from office in the past year, some explicitly for corruption, others without public explanation. There was speculation that the third plenum had been delayed due to the corruption investigations of Central Committee members. The most prominent of those being investigated include defence minister Li Shangfu, whose expulsion from the party and its Central Committee was announced in June (and confirmed by the plenum this week). Others are former science and technology minister Wang Zhigang and former finance minister Liu Kun, whose removal from his ministerial position was announced at the same time as Qin’s dismissal as a state councillor. This table lists the most significant dismissals of the past year:

Several of these people had policy roles that were important to achieving by mid-century Xi’s vision of the ‘national rejuvenation of the Chinese nation’, meaning to make China the world’s leading economic power and the most influential political actor in global politics.

In addition to the removal of the defence minister and the commander of the People’s Liberation Army Rocket Force, nine other military officials were also purged last year—in part due to corruption that led to missiles being filled with water instead of fuel, according to US intelligence assessments. Such incidents have likely eroded Xi’s confidence in the armed forces’ capabilities and set back his military modernisation mission.

If Xi wants the party to achieve his vision for China, he needs to know he can trust his officials to give him accurate assessments and faithfully carry out his orders. The question of whom he can trust is clearly on his mind: in recent months, he has said he wants officials to ensure his orders are carried out ‘smoothly’ and that the PLA must always remain steadfastly ‘loyal and reliable’ to the party and therefore to Xi personally.

Since his appointment as party leader in 2012, Xi has made fighting corruption within it a central feature of his rule, removing both high and low ranked officials in ministries, military branches, and state-owned enterprises. Millions have been prosecuted.

Xi began his third term as leader at the 20th party congress in October 2022 by filling the upper echelon of the party with personal allies and loyalists, some of whom had been with him for decades. These were all men (there were no women) whom he thought he could trust to do as he said and even tell him what he needed to hear. Within less than a year, he was having to cut some of his own proteges loose.

It’s not easy being number one, particularly one who has become so central to all aspects of governing China and who is now even more reluctant to delegate than before. Each one of Xi’s decisions affects every facet of China’s society, prospects and international standing. Xi will likely always need to have one eye looking over his shoulder for the next Qin Gang to appear. And in the end, he is completely alone with it all.