Overseas investment is getting riskier. The government needs to step up

Australian companies operating overseas are navigating an increasingly volatile geopolitical landscape where economic coercion, regulatory uncertainty and security risks are becoming the norm. Our growing global investment footprint is nationally important, and the Australian government must support it more strongly.

The government needs to do this above all to counter market manipulation by China and even its seizure of Australian assets, but other risks are piling up, too.

Australia’s outward foreign investment is not just about business; it is a strategic imperative, with the country’s superannuation funds, trade stability and national security all tied to the success and resilience of its companies operating in high-risk environments around the world.

Many Australians understand the importance of inward foreign investment in driving economic growth, but far fewer appreciate the scale of Australian capital flowing overseas. Australia’s total investment abroad now stands at $3.8 trillion—82 percent as large as the stock of foreign direct investment in Australia.

Manufacturers, financial institutions and miners lead our outward foreign direct investment (FDI), the establishing or buying of businesses in other countries. It embodies Australia’s deep economic integration with global markets. Yet, as geopolitical risks intensify, Australia can no longer take the security of these investments for granted, especially in the mining sector.

Australian minerals companies have built a huge global footprint. S&P Global data shows that Australian-headquartered and ASX-listed companies operate 331 mines and downstream processing plants domestically and that 120 Australian companies manage 212 mining and processing facilities overseas.

In 2024 alone, Australian companies invested $4.6 billion in exploration, of which 53 percent spent in Australia and the rest on all other continents except Antarctica. The $195 billion in outbound mining FDI recorded in 2023 further illustrates the scale of this global presence, alongside $215 billion in manufacturing FDI, much of which is tied to minerals processing.

Australian miners have a long history of navigating complex global environments. However, rising geopolitical tensions, economic coercion and regulatory instability make risk management increasingly difficult. The sector’s dependence on foreign capital and markets leaves it vulnerable to supply chain disruptions, trade restrictions and political interference, which threaten profitability and long-term strategic resilience.

Front of mind here is China’s increasing economic coercion. China’s actions serve to reshape global minerals markets, creating risks that extend far beyond trade disruptions. Through market manipulation, aggressive acquisition tactics, and political interference, China is systematically undermining competition. It is attempting to seize control of critical minerals projects and even emboldening hostile regimes to detain Australian mining executives as leverage for financial gain.

Chinese-linked companies have used coercive tactics and state-backed influence to try to take control of Australian-owned mining operations, particularly in some African countries with weak governance in minerals. In 2024, an Australian company was awarded US$90 million in compensation after the Tanzanian government unlawfully seized a nickel deposit, highlighting the unstable regulatory environment Australian firms can face abroad.

Meanwhile, Russian-backed military regimes in Mali and Niger, combined with jihadist insurgencies in key West African mining regions, are increasing security risks for Australian businesses. The closure of US military bases in Niger in 2024 further complicated the security landscape, raising concerns about the long-term viability of Australian investment in these regions.

While the Australian government sponsors the West Africa Mining Security Conference, tangible support for Australian companies operating in high-risk regions is minimal. Unlike Canada, which maintains 17 trade offices across Africa, Australia has just one, in Nairobi. Despite Australia’s large mining and petroleum investments in West Africa, there is just one diplomatic post to service nine countries. This lack of diplomatic and commercial representation leaves Australian companies at a significant disadvantage in security and investment advocacy.

Meanwhile, escalating tariff disputes between the United States and China and retaliatory trade measures from Canada, Mexico and the European Union further complicate Australian companies’ investment and trade outlook. The full impact on Australian-controlled production at home and abroad remains uncertain but potentially severe.

Australian mining depends heavily on foreign investment and financial mechanisms, including cash-backed offtake agreements. China dominates the financing and sales mix, making it an essential partner and a strategic risk. China’s deliberate manipulation of mineral prices, particularly in rare earth markets, and its covert and coercive attempts to acquire key mining assets directly threaten Australia’s economic sovereignty.

Multiple takeover attempts of Northern Minerals and allegations of similar activities around control of Global Lithium Resources demonstrate China’s ongoing efforts to increase control over Australia’s critical minerals industry. This threatens national security and broader supply chain diversification efforts.

The Australian government must take decisive action in response to the rapid escalation of geopolitical risks.

First, a dedicated task force led by the Department of Foreign Affairs and Trade should provide real-time risk assessments and direct assistance to companies navigating complex security and regulatory environments. Second, the Australian Securities and Investments Commission must collaborate more closely with the Foreign Investment Review Board to detect and counter corporate coercion threatening Australia’s national interest. Third, Australia must prioritise deeper engagement with like-minded partners, including the US, Canada, Japan, the EU and South Korea, to accelerate the development of more secure, diverse and sustainable critical minerals supply chains.

While Australia has made cooperation commitments under multiple critical minerals agreements, implementation has been slow and inadequate. With global competition intensifying, there is no time to waste.