Labor is spending billions on propping up the metals industry, saying it’s about saving jobs. But the government’s main motivation is its drive to arm Australia for war with China.
In February, federal and South Australian Labor announced a joint rescue package for the Whyalla steelworks worth $2.4 billion.
In August, Nyrstar was handed $135 million by the federal, SA and Tasmanian governments to develop production of the rare earths antimony and bismuth, and germanium and iridium, at Port Pirie and Hobart.
In October, federal Labor and the Queensland state government chipped in $600 million to support Glencore’s Mount Isa copper smelter.
And the Financial Review reports that, “The bailouts look set to continue, with Rio Tinto reportedly lobbying for more than $1 billion in support for its Tomago [NSW] aluminium smelter.”
The closure of any of these operations would destroy jobs and devastate local communities. The McKell Institute says of Whyalla, “The steelworks underpin around half of the broader regional economy, directly employing 25 per cent of the Whyalla workforce and indirectly employing another 35 per cent.”
The bailouts show that the government can intervene to save jobs—although at a cost of $1 million each.
This is no thanks to the main union at the Whyalla plant, the Australian Workers Union, which has failed to organise any resistance to job losses. Its response to Labor’s rescue package was to pledge industrial peace.
Meanwhile Labor is refusing to take equity in the businesses, let alone nationalise them, in return for the flow of public funds—money that would generate many more jobs in education or welfare. The reason for this flood of public subsidies is Labor’s new focus on “sovereign capability”.
Supply chains
Sovereign capability is the ability for Australian capitalism to produce strategically important goods or materials, primarily but not only for the military.
As a government briefing document puts it, “Sovereign Industrial Capability Priorities are capabilities that are critical to Defence and must be developed or supported by Australian industry.”
The aim is to avoid disruptions to overseas supply chains or monopolisation of industry sectors by China.
Industry Minister Tim Ayres defended government subsidies as saving jobs but added, “It’s also about a clear-eyed assessment about what is in Australia’s national interest in strategic and economic resilience terms.”
Whyalla manufactures three-quarters of Australia’s domestic steel supply. Its output is important for the construction industry but also has an important role in military production.
The Strategist reports that, “Whyalla’s steel is relatively free from impurities, meaning it has strategic importance for military manufacturing, including for the Benalla munitions plant.”
Whyalla steel is also used for railways, which would have an important role moving soldiers and military supplies in war.
A University of Adelaide commentator put it this way, “Steel is a vital input for defence industries such as ship and submarine building. What could be said of a country’s autonomy—or its sovereign capability—if it relies on others for the steel needed for its defence?”
The processing of rare earths by Nyrstar will provide materials needed for a range of technologies, including military functions.
Critical minerals
Steel is important to Australian capitalism but rare earths may possibly play an even more important role in the future.
In 2023, Australia produced 49 per cent of the world’s supply of lithium, 9 per cent of the manganese and 24 per cent of the zircon.
Giving the US access to Australian rare earth deposits was key to Prime Minister Anthony Albanese’s warm welcome in the White House in October.
A government briefing paper says, “Critical minerals are essential to modern and advanced technologies, including computers, heavy industry, defence and renewable energy. However, these commodities are exposed to risks of [overseas] supply chain disruption or bottlenecks.”
One of the reasons the government stepped in to keep the Mt Isa copper smelter afloat was the role it plays underpinning mining developments in the region, which has a cluster of resources including cobalt and molybdenum.
Meanwhile the government is hoping to boost onshore processing and potentially manufacturing.
But the driver for all this spending is not human need—whether in terms of jobs or human services.
The government is keeping metal smelters afloat and encouraging rare earths production for the same reason that it’s spending $368 billion on AUKUS nuclear-powered submarines—preparing for a future war with China.
We need to demand an end to the arms spending and the use of steel, copper and rare earths for homes, renewable energy, public transport and health and education technologies.
By David Glanz
