Critical minerals buyers’ clubs test Asia Pacific governance
The idea of critical minerals buyers’ clubs has gained prominence in international policy debates. Faced with growing supply insecurity, export controls and price volatility, policymakers are looking beyond supply diversification towards demand-side coordination. Proposals for anchor markets, standards-based markets or coordinated buyers’ arrangements seek to counter China’s dominance of critical minerals by pooling purchasing power, stabilising prices and providing assured offtake for non-Chinese supply.
For many, the appeal is clear. Australia is a major upstream supplier seeking more secure demand and price stability, while a number of ASEAN states occupy key positions in processing, manufacturing and trade. Japan and South Korea are highly exposed downstream consumers with strong incentives to reduce disruption risks. Buyers’ clubs aim to shield producers and consumers alike from market manipulation and geopolitical shocks, though practical implementation remains difficult.
Importantly, no formal regional buyers’ club currently exists in the Asia Pacific. Discussions to date have largely taken place at the national level, among partners such as Japan, South Korea and Australia, and within broader groupings such as the G7 and the European Union. Buyers’ clubs are an emerging policy concept rather than an established regional institution.
Proposals for buyers’ clubs have emerged partly because existing multilateral institutions are ill-equipped to manage the geopolitical dimensions of critical minerals. The World Trade Organization’s rules offer limited scope for disciplining industrial policy, export controls or strategic procurement, while broader multilateral forums struggle to coordinate politically costly commitments among diverse members. Governments increasingly favour plurilateral or minilateral arrangements that promise speed, flexibility and alignment among trusted partners.
In the Asia Pacific, regional cooperation mechanisms coexist with dense webs of bilateral agreements, but this has not translated into sustained, regionally anchored demand-side coordination. Instead, the most consequential initiatives shaping the region have been led by the United States. Through a growing set of bilateral agreements framed by Washington as the foundations of a ‘critical minerals club of nations’, the United States is actively shaping investment flows, project financing and strategic alignment across Asia Pacific economies.
While these initiatives offer participating states access to capital, technology and security guarantees, they also draw demand, expertise and political attention towards the US market. As a result, incentives for regionally centred coordination are weakened, fragmenting efforts to build a cohesive buyers’ club centred on regional demand. Moreover, efforts to operationalise G7 coordination around standards-based critical minerals markets point to growing ambition but also highlight the difficulty of moving from shared principles towards commitments that bind. Buyers’ clubs represent the most ambitious extension of this trend, shifting from coordinating supply diversification to coordinating demand.
The feasibility of buyers’ clubs depends on the depth of coordination they can achieve. At one end lies thin coordination, including information sharing, voluntary standards, joint statements and loose policy alignment. Thin coordination is politically palatable and relatively easy to establish, but it cannot guarantee offtake, stabilise prices or prevent firms from sourcing cheaper inputs.
Conversely, thick coordination involves binding commitments — coordinated procurement, shared rules of origin, trade measures to penalise non-members, price support mechanisms and explicit incentives for firms to source within the club. Only this approach can plausibly shift market power, underwrite investment in alternative supply and insulate members from price manipulation.
Strategic stockpiling sits uneasily between these two modes of coordination. In principle, stockpiles can buffer short-term supply shocks and price spikes. Australia’s proposal to establish a strategic reserve reflects this logic, with similar initiatives emerging among other advanced economies. But who should bear the cost of stockpiles — exporters or consumers in destination markets?
Stockpiling alone cannot substitute for sustained demand-side coordination. Many critical minerals degrade, are costly to store or exist primarily as intermediate products rather than standardised commodities. Strategic reserves function as a financial and contractual instrument, reinforcing the need for thicker coordination.
The difficulty is that thick coordination is precisely where buyers’ clubs become most fragile. It imposes real economic costs and constrains policy autonomy. It also demands alignment not only among governments, but between governments and firms — many of which prioritise cost minimisation and flexibility.
These challenges are especially acute in the Asia Pacific, where deep trade integration, diverse development models and a strong preference for hedging shape the political economy. For many ASEAN economies, and for Japan and South Korea — whose manufacturing sectors are deeply embedded in regional supply chains — China is still a dominant trade partner and investor across multiple stages of critical minerals and advanced manufacturing value chains. The scale and continued attractiveness of the Chinese market itself further complicates efforts to sustain exclusionary or preferential demand-side arrangements.
As a trusted upstream supplier and close partner of several prospective buyers’ club members, Australia stands to benefit from more stable demand and clearer investment signals. Yet without credible demand guarantees, upstream diversification remains exposed to price cycles and strategic oversupply.
Much of the buyers’ club debate focuses on coordination among like-minded states, but less attention is paid to Chinese market power itself. China’s influence does not rest solely on episodic export controls or overt coercion, but on a structurally embedded control architecture spanning mining, processing, refining, logistics, finance and downstream manufacturing.
This architecture allows China to shape markets continuously. Complex supply chains enable blending and processing across jurisdictions, making it difficult to define and enforce Chinese origin in intermediate products — especially in Southeast Asia’s integrated manufacturing networks. Tightening traceability raises costs for club members, while loosening it undermines effectiveness.
China can also deploy targeted bilateralism through long-term offtake agreements, preferential pricing or investment packages for key producers and processing hubs. Export controls add an additional layer of leverage when embedded within this broader system. Strategic oversupply lets China flood markets to drive down prices and deter investment in higher-cost non-Chinese projects. Paradoxically, this behaviour pushes buyers’ clubs towards even thicker coordination, amplifying the political and economic costs that make such arrangements difficult to sustain.
Buyers’ clubs should be understood less as a technocratic solution to critical minerals insecurity than as a stress test of regional governance. Their success depends on both institutional design and the willingness of states to absorb costs, resist defection and sustain coordination over time, while contending with a rival whose market power is structurally embedded.
For Australia, ASEAN, Japan and South Korea, the question is not simply whether buyers’ clubs can be built, but whether they will endure. In a region defined by economic interdependence, strategic hedging and competing centres of demand, the durability of demand-side coordination remains uncertain. If buyers’ clubs falter, it may reflect less on the concept itself than on the limits of collective action in an increasingly fragmented regional and global trading order.
This article is originally featured on the East Asia Forum.
Article by Kevin Thow, a researcher at The Australian National University, and Vlado Vivoda, an Industry Fellow at the Centre for Social Responsibility in Mining, Sustainable Minerals Institute, The University of Queensland.