Securing a steady supply of critical minerals and rare earth elements will soon be as vital to developed countries as the energy resources of old like oil, gas, and coal. Long dominated by a Chinese monopoly, critical minerals, and their sub-section of rare earth elements (REEs) underpin the world’s major economies, enabling the manufacture of clean energy technologies, defence hardware, and vital semiconductors.
Over the years, China’s dominance has been so complete that it has been able to regulate its industry’s production and prices to eliminate any competition effectively. In the background, Australia remains well-situated with one of the world’s largest reserves of critical minerals, including lithium and cobalt, while retaining the sixth-largest REE deposits currently known.
These rare earth elements are a group of metals comprising 15 lanthanide features, including:
Lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb) and lutetium (Lu). Yttrium (Y) and scandium (Sc) are also often grouped together with the REEs.
According to Prime Minister Anthony Albanese, “The path to net zero carbon emissions runs through the Australian resources sector,” However, Australia’s downstream, or value-added minerals processing, has traditionally lagged well behind our Chinese competitor, with our nation generally acting as the world’s quarry and exporting vast amounts of unprocessed raw materials.
However, this paradigm must change as a new trade war looms and the divide between the free world and authoritarian regimes grows wider. This puts more pressure than ever on Australia to up its game in the rare earths sector, ensuring resources, energy, and national security potential for itself and its strategic partners.
Critical minerals and rare earth’s role in defence industries have become more evident as the world falls into a new age of conflict. Minerals like gallium hold an outsized sway over advanced militaries, including those of Western nations like Australia and the US. As the world’s largest producer of gallium and known ‘frenemy’ of the West, China has imposed export restrictions on the metal, posing significant national security issues.
Here’s a quick case study:
The F-35 Lightening, or Joint Strike fighter, is the world’s most advanced fighter jet and a significant deterrence to invasion and war. Over 1000 F-35s have been built by US defence contractor Lockheed Martin and are operational in 17 countries, including founding members the USA, UK, Australia, Italy, the Netherlands, Canada, Denmark, and Norway. As a part of the F-35s upgrade schedule, a new radar is being designed, which will rely heavily on gallium nitride for its cooling system.
We can see here the clear link between China’s export restrictions on gallium and the direct impact it could have on the national security of nations that own and operate the F-35 fighters.
This is no accident; it’s a strategic move.
One that highlights how rare earths can be used as a tool for global power plays. In response, the Albanese government has requested that Australia be afforded domestic status under the US Defence Production Act 1950. It’s hoped domestic status would encourage US companies to import more Australian critical minerals, bolstering the local industry and becoming the only other country to be named as a domestic source under the Act alongside Canada.
Demand for critical minerals is predicted to rise worldwide as developed economies continue decarbonising. The World Bank estimates that over 3 billion tonnes of critical minerals and REEs will be required by 2050. This puts Australian miners and downstream processors in an advantageous position as countries turn away from Chinese supply or are locked out via trade restrictions.
Down Under, there are roughly over 80 critical mineral and REE mining projects under development with an estimated value of up to $40 billion. However, this figure pales compared to the value in potential downstream industries, with some estimates suggesting it could be in the region of an additional $140 billion in national GDP.
But to unlock these benefits, Australia must not only build out its mining base for future-focused metals but also foster a thriving downstream industry where base materials are turned into value-added products. The government knows this and recently earmarked a further $2 billion for investment in Australia’s Critical Minerals Facility, a vital strategic component.
However, $2 billion represents a drop in the ocean of what’s required, as most of that money was gobbled up by just one project, Iluka’s critical minerals processing facility in Western Australia, slated for action in 2025. As Australia aims to become a critical mineral and clean energy superpower and one of the only viable non-Chinese suppliers, its strategy must broaden to encompass downstream processing; however, signs are it may not be moving fast enough.
Today, China remains in control of about 60% of rare earth ore, produces 85% of the oxides, and delivers more than 95% of the rare earth manufacturing.
Simply put, the communist state is the world’s REE giant.
The commercial viability of Chinese reserves, easy access to state-backed financing, and loose environmental laws all assist the country in building its critical minerals dominance in global markets. Foreign ownership of Australian mineral wealth risks ceding control to other nations and poses a risk to national security and the potential of our processing industry.
Experts are encouraging the government to introduce policies around this, aimed mainly at mitigating the Chinese monopoly. If Australia can master its policy settings – to protect what it has – while providing attractive investment conditions for downstream REE processing, it will succeed in becoming an industry price setter.
This will mark a dramatic shift away from the current status quo, where the nation remains at the mercy of global commodity prices and their fluctuations while ensuring our future prosperity and security are assured.
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