Australia’s Prime Minister Anthony Albanese has announced a bold plan to invest A$1.2 billion (£580 million) in creating a strategic reserve for critical minerals, as trade tensions with China escalate. The proposed reserve, which includes rare earth elements and other essential minerals, is part of a broader strategy to secure Australia’s supply of resources vital to global technology, including electric vehicles and advanced weapons systems.
This announcement comes after China imposed export restrictions on seven rare earth elements, which are integral to the production of cutting-edge technologies like fighter jets, robots, and electric vehicles. While China’s export controls apply to all countries, they are widely viewed as a retaliatory measure against the US, following President Donald Trump’s tariffs on Chinese imports. Beijing’s move has intensified fears over the security of rare earth supplies, particularly in the US and Europe, which rely heavily on China for these critical resources.
Albanese’s plan aims to ensure that Australia prioritizes minerals essential to national security, both for its own use and for its international partners. Australia is a major producer of key minerals like lithium and cobalt, and its strategy may challenge China’s dominance in the rare earths market, where 90% of refinement takes place.
Rare earths, which are a group of 17 elements, are notoriously difficult to extract and refine, earning them their “rare” label. These minerals, including samarium and terbium, are crucial in producing technologies that will shape the future, including electric vehicles and military defense systems. However, the refining process is largely controlled by China, giving it significant leverage over the global supply chain.
The US has been particularly affected, as it imports about 75% of its rare earths from China. With trade tensions rising, the US has struggled to secure a stable supply of these vital minerals. Philip Kirchlechner, director of Iron Ore Research in Perth, Western Australia, noted that the US and EU had failed to recognize the strategic importance of rare earths, leaving China in a dominant position.
Elon Musk, CEO of Tesla, recently highlighted the impact of China’s rare earth restrictions on his company’s development of humanoid robots, symbolizing the significant challenges faced by US firms that rely on these materials.
Albanese’s reserve proposal aims to give Australia and its allies, such as the US and EU, greater control over these critical minerals. However, analysts caution that while the reserve could mitigate some supply risks, it does not address the issue of refining. Australia, despite being a major miner of lithium, refines only a small fraction of the material, while China controls over half of the world’s lithium refining.
Australia has made strides in developing its own rare earth refining capabilities, with investments in processing plants and rare earth mines. However, experts predict that Australia will still rely on China for refining until at least 2026.
As tensions continue to rise, Australia’s move is seen as part of a broader strategy to protect its interests and those of its partners from China’s growing influence. While some analysts view the plan as a sophisticated countermeasure, they also acknowledge that Australia will not be able to completely replace China’s dominance in the refining sector.
