China has sought to plug its zirconium shortfalls by taking major stakes in two West Australian miners. What could possibly go wrong
One of them is ASX-listed Image Resources.
Its largest shareholder is China's LB Group which has close links to the government in Beijing.
China receives 100% of Image Resources's product. Through a subsidiary, LB Group is its primary customer.
The LB Group annual report details 11 pages of Chinese government support, including payments for "strategic emerging industries" and development of nuclear-grade zirconium sponges.
Image Resources has, in the past, promoted the potential military applications for its minerals, saying in its 2024 annual report that zirconium can be used in nuclear energy, jet engines, rockets and hypersonic vehicles.
In 2017, its chief executive Patrick Mutz told a trade publication that Image Resources's primary customer was "one of the only companies, if not the only company in China, licensed to produce nuclear-grade zirconium sponge".
While zirconium sponges are vital for nuclear energy, they are also used in nuclear-powered submarines and aircraft carriers, and play a role in any nuclear weapons program.
When the US bombed Iran's Isfahan nuclear facility in June, the targets included a zirconium production plant.
In 2015, Australia's Foreign Investment Review Board (FIRB) approved 
Guangdong Orient Zirconic, now a subsidiary of LB Group, becoming the largest shareholder in Image Resources.
There is nothing preventing Image Resources or other miners from exporting raw mineral sands to China. Even though the companies involved must declare who the end users are, the trade remains only lightly regulated.
Trade data shows the zirconium going to China is not all used for domestic purposes. Some of it is being re-exported to Russia, helping to fuel Putin's war effort.
In the 12 months to Feb 2025, China's zirconium exports to Russia were worth nearly $70 million, and they have increased by more than 300% since the war began.
The trade data shows Image Resources's largest shareholder is a sizeable player in this trade, sending over $5 million worth of zirconium to Russia in the year to Feb 2025.
The biggest buyer of Chinese zirconium is Russian manufacturer CMP, an arm of Russia's state-owned nuclear corporation, Rosatom. CMP produces the cladding for nuclear fuel rods and the alloys in hypersonic missiles.
Over the past three years, Russia has used the Ukraine war to test its new arsenal of hypersonic missiles, including one called the Zircon, against civilian targets.
Another major source of zirconium for China is the Thunderbird Mine near Broome in northwest WA.
In 2020, FIRB approved Chinese company Yansteel purchasing a 50% share in the Thunderbird mine.
The mine, which sells 100% of its production to China, was given a major leg-up by the federal government.
In 2022, it received a $160 million concessional loan from the Northern Australia Infrastructure Facility (NAIF), which was a key factor in getting the mine into production.
At the time, the NAIF failed to mention the well-known defence applications for zirconium, saying only that demand was set to grow steadily from "construction, advanced manufacturing and renewable energy".
One of them is ASX-listed Image Resources.
Its largest shareholder is China's LB Group which has close links to the government in Beijing.
China receives 100% of Image Resources's product. Through a subsidiary, LB Group is its primary customer.
The LB Group annual report details 11 pages of Chinese government support, including payments for "strategic emerging industries" and development of nuclear-grade zirconium sponges.
Image Resources has, in the past, promoted the potential military applications for its minerals, saying in its 2024 annual report that zirconium can be used in nuclear energy, jet engines, rockets and hypersonic vehicles.
In 2017, its chief executive Patrick Mutz told a trade publication that Image Resources's primary customer was "one of the only companies, if not the only company in China, licensed to produce nuclear-grade zirconium sponge".
While zirconium sponges are vital for nuclear energy, they are also used in nuclear-powered submarines and aircraft carriers, and play a role in any nuclear weapons program.
When the US bombed Iran's Isfahan nuclear facility in June, the targets included a zirconium production plant.
In 2015, Australia's Foreign Investment Review Board (FIRB) approved Guangdong Orient Zirconic, now a subsidiary of LB Group, becoming the largest shareholder in Image Resources.
There is nothing preventing Image Resources or other miners from exporting raw mineral sands to China. Even though the companies involved must declare who the end users are, the trade remains only lightly regulated.
Trade data shows the zirconium going to China is not all used for domestic purposes. Some of it is being re-exported to Russia, helping to fuel Putin's war effort.
In the 12 months to Feb 2025, China's zirconium exports to Russia were worth nearly $70 million, and they have increased by more than 300% since the war began.
The trade data shows Image Resources's largest shareholder is a sizeable player in this trade, sending over $5 million worth of zirconium to Russia in the year to Feb 2025.
The biggest buyer of Chinese zirconium is Russian manufacturer CMP, an arm of Russia's state-owned nuclear corporation, Rosatom. CMP produces the cladding for nuclear fuel rods and the alloys in hypersonic missiles.
Over the past three years, Russia has used the Ukraine war to test its new arsenal of hypersonic missiles, including one called the Zircon, against civilian targets.
Another major source of zirconium for China is the Thunderbird Mine near Broome in northwest WA.
In 2020, FIRB approved Chinese company Yansteel purchasing a 50% share in the Thunderbird mine.
The mine, which sells 100% of its production to China, was given a major leg-up by the federal government.
In 2022, it received a $160 million concessional loan from the Northern Australia Infrastructure Facility (NAIF), which was a key factor in getting the mine into production.
At the time, the NAIF failed to mention the well-known defence applications for zirconium, saying only that demand was set to grow steadily from "construction, advanced manufacturing and renewable energy".Quote
Byron Wan
@Byron_Wan
What could possibly go wrong
Chinese companies are the largest shareholders in two Australian mines producing zirconium — vital for Beijing's hypersonic missiles and nuclear programs, helping it overcome "severe challenges" to accessing key resources.
In a rare admission of
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Chinese companies are the largest shareholders in two Australian mines producing zirconium — vital for Beijing's hypersonic missiles and nuclear programs, helping it overcome "severe challenges" to accessing key resources.
In a rare admission of