In this deep-dive episode, Ray Powell and Jim Carouso are joined by Matthew Zolnowski, former Special Advisor at the U.S. Department of Defense and President of Greyfires LLC, for an expert exploration of critical minerals and rare earth elements in the context of U.S.-China strategic competition. As tensions escalate in the Indo-Pacific, they examine why these "rocks" are essential building blocks for both military weapon systems and the civilian economy.

Critical Minerals vs. Rare Earths: Understanding the Difference

Matt breaks down the distinction between critical minerals (50+ commodities spanning the periodic table from antimony to zirconium) and rare earth elements (those mysterious bottom rows of the periodic table you never had to learn). He explains China's dominant position in heavy rare earth processing, particularly for permanent magnets used in defense applications, while noting that light rare earths like cerium and lanthanum—used in petroleum refining and glass polishing—remain more accessible from domestic sources like California's Mountain Pass mine.

Stockpiling, Strategy, and Supply Chain Vulnerabilities

The discussion reveals concerning gaps in U.S. defense procurement, including how electronic components bypass normal sourcing requirements, allowing Chinese rare earth magnets into submarines through hard drives, while direct magnet purchases require allied sourcing. Zolnowski details the $2 billion stockpile expansion and explains how stockpiles "buy time" rather than widgets—bridging the gap between crisis onset and Defense Production Act responses.

Industrial Policy vs. Market Forces

Ray and Jim probe the tension between America's traditional free-market approach and emerging industrial policy, examining deals like the MP Materials contract with its $150 million heavy rare earth separation line and EBITDA guarantees. Matt argues this represents uncharted territory, fundamentally breaking with traditional government-industry relationships as the U.S. grapples with China's strategic dominance in processing and price manipulation.

Australia, Allies, and Alternative Strategies

The hosts explore why U.S.-Australia collaboration on critical minerals has remained limited despite Australia's "periodic table on a plate" capabilities, with Zolnowski noting regulatory barriers that only recently opened Defense Production Act eligibility to Australian companies. He advocates for commodity-specific strategies rather than broad critical minerals policies, suggesting successful models like heavy mineral sands operations that diversify beyond single-commodity dependence.

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👉 Sponsored by BowerGroupAsia, a strategic advisory firm that specializes in the Indo-Pacific.

In this urgent bonus episode, Ray Powell and Jim Carouso return to discuss the sharp re-escalation at Second Thomas Shoal in the South China Sea following the highly publicized Chinese naval collision at Scarborough Shoal on August 11, 2025. Drawing from satellite imagery, open-source information, and media reports, they analyze China’s deployment of an armed maritime “swarm” near the BRP Sierra Madre, including coast guard cutters, maritime militia vessels, and rigid-hulled inflatable boats (RHIBs) equipped with mounted weapons.

China’s Escalation and Swarming Tactics

Ray details how, just a day after the collision, China shifted significant assets from Mischief Reef to Second Thomas Shoal, amassing a force that now includes coast guard ships, maritime militia vessels, and armed RHIBs maneuvering alarmingly close to the Philippine military outpost. This “swarming” not only serves as a physical blockade but also as psychological intimidation through water cannon drills and propaganda operations.

Historical and Strategic Context

The BRP Sierra Madre has symbolized Philippine sovereignty at the shoal since being deliberately grounded in 1999, which lies within the Philippine Exclusive Economic Zone. Despite China’s extensive militarization of neighboring Mischief Reef and other features, they have yet to dislodge this single ship—a continuous thorn in Beijing’s nine-dash line claims and a longtime flashpoint for maritime confrontation.

Provocation, Deterrence, and International Implications

Jim and Ray explore the strategic calculus behind China’s move, interpreting it as a probe aimed at provoking a Philippine misstep to justify more forceful measures, such as seizure or siege of the outpost. Philippine forces remain strictly instructed to exercise restraint, aware of the potentially explosive consequences. The episode places these events within a broader geopolitical framework, including rising tensions in U.S.-Taiwan relations, the recent Trump-Putin summit in Anchorage, and emerging uncertainties in U.S. alliances across Asia.

What’s Next: Risks and Responses

The hosts weigh the possibility of China demanding new concessions to allow future Philippine resupply missions, emphasizing that a full siege would be catastrophic and globally indefensible. Given the rusted state of the Sierra Madre and its irreplaceable symbolic value, any disruption to resupply could be a tipping point. They also assess the credibility of U.S. treaty commitments and freedom of navigation operations as signals of deterrence or escalation.

Anecdote on Summit Diplomacy

On a lighter note, Ray offers a “there I was” story from President Obama’s 2016 visit to Vietnam, where a meticulously planned official lunch was upended for an impromptu meal with Anthony Bourdain, which became the headline for the visit.

Why Listen?

A definitive update and expert analysis on the mounting crisis in the South China Sea, China’s maritime gray-zone tactics and their implications for Philippine sovereignty, and Indo-Pacific alliances and security dynamics.

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In this must-listen episode, hosts Ray Powell and Jim Carouso sit down with Arthur Sinodinos, Australia’s former Ambassador to the United States and key figure in the Australia-United Kingdom-United States (AUKUS) security pact, to get the exclusive inside story on how this landmark agreement came to be, how they dealt with fallout from capitals in China, France, and Southeast Asia, and why this agreement is a strategic game-changer for the Indo-Pacific region and global security.

AUKUS Origins & Negotiations: Ambassador Sinodinos takes listeners behind the scenes, sharing firsthand accounts of the tense and complex negotiations that led to the historic AUKUS pact. Learn how shifting geopolitics, submarine technology, and strategic urgency propelled Australia to pursue nuclear-powered submarines, pivoting away from a French deal to partner with the US and UK.

The Political Hurdles and Breakthroughs: Hear exclusive details on the US administration’s priorities—affordability, bipartisan support, and non-proliferation—and the roles played by world leaders in making AUKUS a reality. Sinodinos delves into how the agreement was shaped amidst the skepticism, and how subsequent legislative reforms have already boosted technology sharing and industrial collaboration among the allies.

Regional and Global Impact: This episode addresses the shockwaves AUKUS sent through the Indo-Pacific and beyond: the diplomatic fallout with France, reactions from China and ASEAN countries, and the challenges of keeping such a monumental agreement secret until the last moment. Sinodinos also discusses the "Pillar Two" focus on advanced capabilities like AI, quantum, and cyber, adding another level of strategic cooperation.

The Future of AUKUS and Defence Policy: The conversation explores ongoing debates in Australia—including headwinds from prominent critics, questions about US commitment, and concerns about defence spending thresholds. Sinodinos assesses the credibility of America’s promises to deliver nuclear submarines and outlines the pressure both countries face to stay on schedule and deliver strategic value.

Personal Insights from Washington During Crisis: Discover what it was like running the Australian embassy in Washington D.C. during the COVID-19 pandemic, the tumultuous 2020 US election, and the January 6th Capitol riot. Sinodinos candidly reflects on bridging cultural divides, correcting Australian misconceptions about America, and what makes the US-Australia partnership resilient through political and economic shocks.

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👉 Follow Ray Powell on X, @GordianKnotRay, or LinkedIn, or check out his maritime transparency work at SeaLight

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👉 Sponsored by BowerGroupAsia, a strategic advisory firm that specializes in the Indo-Pacific