The Road to Critical Mineral Security Leads through Australia

It is commonplace to observe that Beijing enjoys control over much of the globe’s rare earth and critical mineral extraction and processing industries. China built this dominance over two decades and is unwilling to give it up. On the other hand, America’s critical minerals supply chains feature extensive vulnerabilities that private enterprise cannot resolve independently. The U.S. government faces a daunting challenge in establishing resilient, competitive, and alternative critical mineral supply chains immune to disruptions and economic coercion.

The United States must cooperate with its allies on critical minerals for two reasons. First, its industries have expansive demands that cannot be met by increased domestic production alone. Second, it does not possess enough mines and accessible deposits of all the critical minerals industry needs.

The U.S. economy’s already extensive critical minerals demand will grow almost exponentially in the coming decades. Demand for lithium, a crucial input in electric vehicle (EV) batteries, is projected to increase by 4,000 percent in the coming decades. 

No single nation can meet the projected global demand for critical minerals on its own. The Organization for Economic Co-operation and Development (OECD) estimates that fifty new lithium mines, sixty new nickel mines, and seventeen new cobalt mines will be required to meet global demand. These are only three of fifty minerals that the United States now classifies as “critical minerals.”

No nation has enough proven resources to meet this demand, but a few are key. The concentration of minerals is spread worldwide, including in China, Russia, the Congo, South America, and Australia. Many countries with large mineral reserves are strategic competitors or politically unstable.

China currently controls the critical minerals and rare earth marketplace. It is the global lead producer of twenty-nine commodities, including twenty-two metals and seven industrial minerals. It refines up to ninety percent of the world’s rare earth ore.

Where China does not possess a near monopoly, it can control the market through “monopsony”—a market condition featuring one overbearingly and singularly important customer. While it does not produce the most essential battery materials—lithium, cobalt, and graphite—it buys, refines, and exports them to incomparable degrees.

Beijing is using this market power in increasingly coercive ways. It has increased restrictions on its critical minerals exports nine times between 2009 and 2020, more than any other supplier. It has cut off Japanese supply for geopolitical reasons and threatened U.S. defense contractors’ supply chains.

Removing China entirely from global critical mineral supply chains is not economically feasible. But competition is needed. America’s critical minerals supply chains cannot depend on a single nation, especially an unreliable one.

With its unparalleled natural wealth in critical minerals, rare earths, and other vital commodities, Australia has emerged as the key ally to bolster the United States’ security and resilience in this vital domain.

However, Australia needs more capital and foreign investment to transform potential into viable supply chains. To date, Chinese state-owned investors have been more than happy to meet this need. 

As a global region, Oceania alone has outstripped Asia’s mineral production since 2000, and this growth has been driven almost exclusively by Australia. But China was also Australia’s largest buyer—fueling its growth with Australian raw materials. 

The Australian government has already acted to inhibit Chinese ownership of critical minerals mining projects, creating space for capital from the United States and like-minded nations.

Australia’s vastness and lack of funding have left significant natural reserves untapped. It has also left Australia, in mining terms, underexplored. Vast reserves might remain hidden in the Land Down Under. 

The United States is not alone in its demand for critical minerals. Global demand is increasing broadly across large economies, and there will be healthy competition from Japan, the EU, and India. The United States has already begun to deepen critical minerals cooperation with Australia, with President Joe Biden promising to designate Australia as a “domestic source” under the Defense Production Act (DPA), allowing Australia to benefit from the $369 billion Inflation Reduction Act clean energy incentives.

A solid economic incentive exists for mutual investment between Australia and the United States in critical mineral mining, refining, and manufacturing. U.S.-Australia ties are also significant and deepening in other areas, principally in defense through the trilateral AUKUS agreement.

At the 2023 Darwin Dialogue, a one-point-five track dialogue with representatives from the US, Japan, and Australia, a clear message emerged for the way forward. Australian, Japanese, and American governments and industry leaders must work together to develop viable, competitive alternative critical mineral markets that offer products through supply chains secure from domestic policy disruptions and economic coercion.

Developing Australia’s critical minerals and rare earths: Implementing the outcomes from the 2023 Darwin Dialogue

Critical minerals and rare earths are the building blocks for emerging and future technologies, inseparable from the supply chains of manufacturing, clean energy production, medical technology, semiconductors, and the defence and aerospace industries. Despite their criticality, their supply chains are exposed to numerous vulnerabilities – threatening the production and development of vital technologies.

This report—based on closed-door, invitation-only discussions at ASPI’s new Darwin Dialogue, a track 1.5 meeting between Australia, Japan and the US—makes 24 recommendations for government and the private sector to support the development of viable, competitive alternative markets that offer products through supply chains secure from domestic policy disruptions and economic coercion.

These recommendations are derived from analysis of the challenges embedded in critical minerals supply chains, including the inability for global production to meet projected demand, and dependency upon China and politically unstable nations as at times near singular sources of production.

Australia’s natural endowments of critical minerals and rare earths provide a unique opportunity to achieve intersecting economic, environmental, and strategic objectives. But, as detailed in this report, effective coordination between Australia’s state, territory and federal governments, mining and industry, and international partners will be pivotal to developing this opportunity. Further still, achieving our critical minerals objectives will require a bold new policy approach from all stakeholders.

Australia’s north and space

This report examines opportunities for the development of sovereign space capability in the Northern Territory, Queensland, and Western Australia. Given that those northern jurisdictions are closer to the equator, there’s a natural focus in the report on the potential opportunities offered by sovereign space launch, particularly in the Northern Territory and Queensland. However, I also consider the potential for other aspects of space besides launch, including space domain awareness, the establishment of satellite ground stations, and space industry. I explore the potential for the co-location of space industry—domestic and international—within or close to launch sites, which would result in the development of ‘space hubs’ in strategic locations in Australia.

Benefits are gained by situating space-launch sites as close to the equator as possible, and two sites—Nhulunbuy near Gove in the Northern Territory and Abbot Point near Bowen in Queensland—are now under development. The closer a launch site is to the equator, the greater the benefit in terms of reduced cost per kilogram of payload to orbit, due to velocity gained by a rocket from the Earth’s rotation.

The report then explores the transformation of Australia’s space sector that’s occurred within the past decade, from one solely dependent on foreign-provided satellite services and locally developed ground-segment capabilities, including for space domain awareness, to the growth of sovereign space industry and the establishment of the Australian Space Agency in 2018. I note that, since the establishment of the agency, Australia’s commercial space sector has expanded rapidly, but now faces headwinds, with the recent cancellation of the National Space Mission for Earth Observation being a serious blow to Australia’s space industry. The Australian space industry sector must now fight to sustain funding. In this report, I argue that the best way to achieve success is to emphasise sovereign launch as a focus for Australian space activities and to reinforce the potential opportunities offered by the north, including for defence and national-security requirements in space.

AUKUS and critical minerals: Hedging Beijing’s pervasive, clever and coordinated statecraft

AUKUS has a heavy focus on R&D of military capabilities. A number of departments, including defence, foreign affairs and prime ministerial equivalents are engaged. The science and technology to deliver those capabilities must resolve issues of insecure supply chains. Currently, supply chains for processed critical minerals and their resulting materials aren’t specifically included.

Yet all AUKUS capabilities, and the rules-based order that they uphold, depend heavily on critical minerals. China eclipses not only AUKUS for processing those minerals into usable forms, but the rest of the world combined. Without critical minerals, states are open to economic coercion in various technological industries, and defence manufacturing is particularly exposed to unnecessary supply-chain challenges.

This is where Australia comes in. Australia has the essential minerals, which are more readily exploitable because they’re located in less densely populated or ecologically sensitive areas. Australia also has the right expertise, including universities offering the appropriate advanced geoscience degrees, as well as advanced infrastructure, world-class resources technology and deep industry connections with Asia and Africa, which are also vital global sources of critical minerals.

This paper outlines why Australia offers an unrivalled rallying point to drive secure critical-mineral supply among a wide field of vested nations, using AUKUS but not limited to AUKUS partners, how WA has globally superior reserves and substantial expertise, and why northern Australia more generally has a key role to play. The paper also explains why policy action here must be prioritised by the Australian Government.

North of 26 degrees south and the security of Australia: Views from The Strategist, Volume 7

The Northern Australia Strategic Policy Centre’s latest report, North of 26 degrees south and the security of Australia: views from The Strategist, Volume 7, is a series of articles published in The Strategist over the last six months. It builds on previous volumes by identifying critical intersections of national security, nation-building, resilience and Australia’s north.

This issue, like previous volumes, includes a wide range of articles sourced from a diverse pool of expert contributors writing on topics as varied as critical minerals, rare earth, equatorial space launch, agriculture, advanced manufacturing, fuel and water security, and defence force posturing. Importantly, it addresses the Defence Strategic from a northern Australian perspective. It also features a foreword by the Honourable Madeleine King MP, Minister for Northern Australia.

Minister King writes, “Northern Australia is central to the prosperity, security and future of our nation and will be the engine room of Australia’s decarbonisation effort and drive towards net zero.”

The 24 articles propose concrete, real-world actions for policy-makers to facilitate the development, prosperity and security of Australia’s north. The authors share a sense that those things that make the north unique – its vast space, low population density, specific geography, and harsh investment environment – are characteristics that can be leveraged, not disadvantages.

North of 26 degrees south and the security of Australia: Views from The Strategist, Volume 6

The Northern Australia Strategic Policy Centre’s latest report, North of 26 degrees south and the security of Australia: views from The Strategist, Volume 6, is a series of articles published in The Strategist over the last six months, building on previous volumes by identifying critical intersections of national security, nation-building and Australia’s north.

This issue, like previous volumes, includes a wide range of articles sourced from a diverse pool of expert contributors writing on topics as varied as maritime law enforcement, equatorial space launch, renewable energy infrastructure, rare earths and critical minerals, agriculture, Industry 4.0, advanced manufacturing, fuel and water security, and defence force posturing. It also features a foreword by the Honourable Madeleine King MP, Minister for Northern Australia.

Minister King writes, “Northern Australia promises boundless opportunity and potential. It is the doorway to our region and key to our future prosperity.”

The 24 articles propose concrete, real-world actions for policy-makers to facilitate the development, prosperity and security of Australia’s north. The authors share a sense that those things that make the north unique – its vast space, low population density, specific geography, and harsh investment environment – are characteristics that can be leveraged, not disadvantages.

This is a link to the previous volume 5.

‘Deep roots’: Agriculture, national security and nation-building in northern Australia

This report offers a multidisciplinary analysis of the various components that make up and influence the vast and complex agriculture industry network in northern Australia. It examines the economic and historical underpinnings of the agriculture industry we know today; the administration, direction and implementation of agricultural policy and funding across levels of government; the many and varied demographic and cultural characteristics of the northern Australian population; and the evolution of place-based physical and digital infrastructure.

The role of infrastructure and infrastructure funding in northern Australia plays a key role in the report’s narrative, which outlines the implications for national security, economic prosperity, service delivery, social cohesion and policy implementation if prevailing arrangements aren’t reformed to a sufficient standard that addresses contemporary challenges.

The report also examines biosecurity vulnerabilities, mitigation strategies for those vulnerabilities and their strategic and national security implications, and the long-term positioning of the north of Australia as critical for future growth, prosperity and security. The focus on opportunities presented by the north’s unique nature throughout the report culminates in a set of recommendations for policymakers to take a unified and big-picture approach across a daunting array of issues and disciplines.

This report suggests:

  1. a unified message among all relevant stakeholder groups with awareness of the strategic role of the northern agriculture sector
  2. greater investment in agricultural research to grow and protect agricultural industries (prosperity is key to security)
  3. greater engagement of Indigenous populations, with genuine appreciation for the role of Indigenous people and their connection and knowledge of land and  water as the key to unlocking potential.
  4. a cohesive nation-building plan.

Breaking down the barriers to Industry 4.0 in the north

Innovation in northern Australia is thriving. It’s not clear why there’s a culture of innovation in the north, and perhaps that represents a focus for social research. However, there’s no doubt that innovators in northern Australia are seizing the opportunity to pursue solutions that generate economic benefits, contribute to national resilience, and respond to defence needs.

This special report highlights how innovators in the north are at the leading edge of the fourth industrial revolution and draws attention to the challenges they face.

Industry 4.0 represents opportunities to transform, but it’s not just about developing and adopting smart technology. And it’s not about evolutionary or transformative change; it’s a different way of thinking that will allow us to leap into a different future. To reap the transformative benefits from Industry 4.0 we need to adopt leading-edge technology in the best way to deliver better outcomes from the perspective of a wider range of interests.

But there are barriers. Australia has regulatory and standards frameworks and mechanisms that have evolved from traditional Industry 2.0 process thinking and Industry 3.0 manufacturing. There are inherent conflicts within and between sectors that safeguard the status quo of outdated and broken supply chains and wasteful manufacturing paradigms.

Through the lens of real experiences and success stories, this special report shines a light on the opportunities and challenges, and highlights what’s needed to better harness those opportunities. In particular, we need to:
•    Drive national capability through a philosophical positioning that’s supported by practical examples of innovation.
•    Acknowledge that economic theory underpinned by a need to have large-scale manufacturing and production lines for viability is thinking not aligned with the opportunity that Industry 4.0 presents.
•    Align government thinking and practice with the growing environmental, social and governance mindset of business and the growing expectations of investors, consumers and the community.
Northern innovators have a commitment to Australia, its future and the kind of world that they want to create for future generations. Thus, they conceptualise, create and deliver by leveraging Industry 4.0 thinking and technology.

Technology doesn’t drive change, but how they use it does. This is sovereign capability in action.

North of 26 degrees south and the security of Australia: Views from The Strategist, Volume 5

The Northern Australia Strategic Policy Centre’s latest report is a series of articles published in The Strategist over the last six months, building on previous volumes by identifying critical intersections of national security, nation-building and Australia’s north.

This issue, like previous volumes, includes a wide range of articles sourced from a diverse pool of expert contributors writing on topics as varied as biosecurity, infrastructure, critical communications, cyber-resilience, maritime infrastructure, foreign investment, space, and Indigenous knowledge-sharing. It also features a foreword by ASPI’s new Executive Director, Justin Bassi.

The 19 articles propose concrete, real-world actions for policy-makers to facilitate the development, prosperity and security of Australia’s north. The authors share a sense that those things that make the north unique – its vast space, low population density, specific geography, and harsh investment environment – are characteristics that can be leveraged, not disadvantages.

Government commits $240 million to critical minerals projects in mission to end Australia’s reliance on China

Dr John Coyne speaks to ABC’s Henry Belot. 

The Australian outback has become the stage for a renewed push to safeguard the future of western industries and break a near complete reliance on critical minerals from China.

China produces and supplies almost all the minerals used in the production of renewable energy products, mobile phones, electric vehicles and even the batteries used in the US joint-strike fighter.

The federal government will today announce $240 million to develop a rare earth minerals industry in Australia with senior ministers openly listing China as one reason to do so.

“China currently dominates around 70 to 80 per cent of global critical minerals production and continues to consolidate its hold over these supply chains,” Energy and Industry Minister Angus Taylor said in a statement.

“This initiative is designed to address that dominance.”

Australia has enormous volumes of rare earth minerals but until now no domestic production capacity has been built, partly because China has refined the minerals cheaply, despite environmental criticisms.

Strategic concerns about China’s market dominance have increased since Moscow’s invasion of Ukraine, which exposed Europe’s reliance on Russia for energy.

“We know that Russia provides very large amounts of thermal coal and gas into Europe and that is now a strategic challenge for them — we want to make sure Australia is never in that position,” Resources Minister Keith Pitt said.

“We do need to ensure that no matter what we do, we make sure that these concentrated supply chains in some areas that we currently have do get broken up into the future.”

The funding announced today includes $30 million for a rare earth minerals separation plant run by Arafura Resources in Central Australia.

Arafura managing director Gavin Lockyer said its Nolan’s Project near Aileron would harness one of the world’s biggest stockpiles of neodymium-praseodymium, which is used to make incredibly strong magnets used in wind turbines and solar farms.

“[Nolan’s] will be Australia’s first vertically integrated project of its kind and world’s second biggest non-China source of rare earths, processing on site to meet more than 5 per cent of global demand,” Mr Lockyer said.

Australian miner Lynas, which produces rare earths for electric cars and Tomahawk cruise missiles, was recently given final approval to construct a rare earth refinery in Kalgoorlie.

Lynas has moved some of its operations outside its production base in Malaysia, where it has faced sustained criticism from environment groups.

Given the strategic risk posed by China’s market dominance, the United States military has taken a financial interest in Lynas, providing initial funding for a processing plant in Texas.

‘We’ve definitely been asleep’

In 2019, China threatened to ban exports of rare earth minerals to the United States during a protracted trade war with Washington.

The threat would have hit the production of military equipment along with a booming renewable energy industry.

Rare earths are an essential ingredient for technologies including wind turbines.(Supplied: Michael Abrahams)

Dr John Coyne, an analyst at the partially Defence funded Australian Strategic Policy Institute, said other strategic allies had been targeted too.

“Ten years ago, China reduced the availability of rare earth to Japan in punishment over issues to deal with the South China Sea,” Mr Coyne said.

Mr Coyne said western nations were increasingly abandoning free market thinking to address the strategic risk.

“I think this is one of those cases where if we don’t want to be exposed and have vulnerable supply chains then there is a need for the government to intervene in the economy and promote national resilience,” Mr Coyne said.

“[China has] done a great job at being able to supply everything the western world needed — whether it be metals or magnets — and they supply them a lot cheaper than what the western world would be able to produce.”

The head of one rare earth minerals company, Northern Minerals, told the ABC the strategic vulnerability was significant.

“China could stop any time in the next three to five years exporting anything to do with heavy rare earths (…) and only supply internal to Chinese industries,” chief executive Mark Tory said.

“We’ve definitely been asleep but the reason we’ve been asleep is because [China] has done a great job at being able to supply everything the western world needed.”