China has invested over $120bn in overseas mining and mineral processing projects since 2023, according to a new report from the Australian think tank Climate Energy Finance (CEF).

The report indicates that these investments, primarily in lithium, rare earths, nickel, and other critical minerals for clean energy technologies, have contributed to the expansion of clean energy industries in developing countries.

Chinese firms are engaging with host governments to develop processing facilities and related infrastructure, such as ports, in exchange for long-term resource access and agreements to purchase output from energy projects.

China holds the majority share in processing key minerals: about 90% of global rare earth refining capacity, 90% of battery component production, and 60% of lithium processing.

According to the report, titled 'Raw Power', Chinese investment is supporting a shift towards clean energy usage worldwide by supplying materials needed for solar panels, wind turbines, electric vehicles and industrial decarbonisation.

“This approach aligns Chinese national, energy security, geopolitical and economic interests with partner governments’ development, industrial and energy transition goals, as it collectively drives global decarbonisation, a critical imperative in the escalating climate crisis,” it says.

The CEF finds that China’s recent resource diplomacy focuses on developing nations and involves building domestic value chains in partner countries. In some cases, such as Zimbabwe banning exports of raw mineral concentrates, Chinese companies have responded by developing local processing capacity rather than relying solely on extraction.

The report contrasts this new model with China’s earlier Belt and Road Initiative investments in traditional power plants abroad.

It also observes that Chinese firms have increased overseas manufacturing activity in response to higher tariffs imposed by the US and changes in US decarbonisation policy.

The document highlights implications for Australia, suggesting that national policy should move beyond extraction toward refining, processing and manufacturing within the country.

It recommends a strategic approach to critical minerals as part of industrial development, calls for clearer policies on foreign capital flows, and suggests selective cooperation with China when it aligns with national interests.

Overall, CEF argues for international partnerships and robust industrial strategies aimed at building supply chain resilience and advancing global decarbonisation goals.