Tag Archive for: Critical Minerals

Darwin Dialogue 2024: Triumph from teamwork

In an increasingly fracturing international system, set to undergo only further strain in the near future, critical minerals are a point of significant international contention. Critical minerals underlie competition across critical civil and defence sectors and promise economic opportunity throughout their supply chain. They are vital to the clean-energy transition with minerals needed for electric vehicle batteries, solar panels, and even wind turbines. Resolving the significant vulnerabilities across critical mineral supply chains is a significant economic and national security challenge.

This report—based on an exclusive, invitation-only discussion at the Darwin Dialogue 2024, a 1.5 Track discussion between the Australian, United States, Japanese and Republic of Korean Governments-makes 11 recommendations for government and industry to develop both the domestic and international critical minerals sector.

This report also assesses the developments in Australia’s critical mineral policy since the inaugural Darwin Dialogue in April 2023, including the flagship Future Made in Australia policy; policy options to unlock new sources of domestic and international capital for the Australian critical minerals sector, and, how to better promote high ESG compliance in the international critical minerals market.

Australia’s natural endowments of critical minerals promise significant economic opportunity. But seizing this opportunity is dependent on teamwork. The Australian Government must work effectively with domestic state and territory governments, as well as close minilateral partners, to resolve the threats facing the critical minerals sector and develop secure and resilient supply chains for ourselves and the international community.

Reclaiming leadership: Australia and the global critical minerals race

Climate policy, geopolitics and market forces are coalescing to deliver Australia a global leadership opportunity in critical minerals. To grasp that opportunity, Australia needs both to utilise its domestic mineral endowment and its mining knowledge and technology and to leverage the global footprint of Australian companies to help build a global supply chain network.

How Australia responds will not only determine economic benefits to the nation but will also affect the world’s ability to achieve minerals security and the sustainability required for the global energy transition and inclusive economic growth.

The global energy transition and other high-technology applications have increased demand for critical minerals, particularly in countries that have strong complex manufacturing industries. At the same time, the concentration of production of many critical minerals, the dominance of China in supply chains and its actions to restrict supply and influence markets, are disrupting both minerals production and availability.

In response, developed nations have formulated critical minerals strategies and entered into bilateral and multilateral agreements, involving supplier nations and customer nations, to build alternative supply chains that are more diverse, secure and sustainable. Australia has committed in multiple agreements to work with like-minded nations to achieve this.

This report is intended to provide the government with a road map to ‘step up’ to (re)activate Australia’s global mineral leadership.

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.

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.

Tag Archive for: Critical Minerals

Trump’s critical minerals order may harm Australian interests

US President Donald Trump is certainly not afraid of an executive order, signing 97 since his inauguration on 20 January. In minerals and energy, Trump has declared a national emergency; committed to unleashing US (particularly Alaskan) resource potential; and established the National Energy Dominance Council (NEDC), granting it considerable executive powers.

His latest minerals order, titled ‘Immediate Measures to Increase American Mineral Production’, aims to overhaul US domestic production and reshape domestic and international critical mineral supply chains. It could derail Australia’s efforts for greater domestic production in the process.

At the strategic level, Trump wants to end US reliance on Chinese and adversarial mineral supplies and massively boost US production for national security and economic gains. While there is room for international partners to assist, the order is clearly aligned with the Trump’s broader America First approach.

Operationally, the US government will attempt to unlock mineral and energy production by administratively and financially prioritising new and existing projects and slashing regulatory red tape across critical minerals, uranium, and other commodities.

This will occur across the supply chain, targeting ‘mineral production’  encapsulating mining, processing, refining and end-use manufacturing in technological productions, including semiconductors, permanent magnets, and electric vehicles.

Executive orders are designed for immediate effect. Trump’s minerals order is no different, outlining near immediate actions for departmental heads and agencies. Much of it overseen by the NEDC.

For example, within 10 days of signing, agencies involved in mine production permitting are to produce a list of viable projects to prioritise. In the following 10 days, the Secretary of the Interior Doug Burgum, through his role as NEDC chair, will select priority projects for immediate approval.

Similarly, legislative reform to mine waste disposal and treatment—presumably reducing environmental protections—is ordered to be introduced to congress within 30 days of signing.

Alongside Burgum as NEDC chair and Secretary of the Interior, US Secretary of Defense Pete Hegseth and Secretary of Energy Chris Wright are tasked with significant decision-making across new investments and project prioritisation.

Project prioritisation, expedited approvals, and expedited delivery of supporting infrastructure are the primary levers through which Trump aims to unlock US mineral production. Achieving each will likely come at cost of environmental and social protections.

Whether it achieves rapid overall production increases remains to be seen.

According to S&P data, US mines have an average lead time of 13 years. Discovery and exploration studies account for the largest proportion at 8.7 years on average. Rapid permits should reduce the lag time between the completion of feasibility studies and mine construction, but it will not open new mines overnight.

Commercial factors, technical and financial feasibility, and major financing hurdles must also be considered. Trump’s slate of mineral and energy orders contain some measures to increase financial support to domestic mining and processing projects, including directing the International Development Finance Corporation to distribute more domestic funding. But doing so quickly and efficiently will test the US government. Industry, additionally, will most likely want to see sustained policy commitment and market effects before investing into new capital intensive projects.

Moving forward there will be opportunities for Australia to grasp, as well as risks to manage.

Several Australian mining companies are already operating or proposing government-supported processing plants in the United States. This includes Lynas Rare Earths’ refinery in Texas, Syrah Resources’ graphite refinery in Louisiana and South 32’s potential battery-grade manganese plant fed by its new Hermosa mine in Arizona. These projects could become important linkages in the sector and may benefit from these recent reforms.

The US will also remain reliant on international supply for some minerals and will need to prioritise close international partners with large mineral deposits, such as Australia.

The US has already demonstrated its willingness to provide generous concessional loans and fund minerals processing projects. The financing provisions of the minerals order will create further opportunities while increasing competitive pressure on Australia—particularly regarding our Future Made in Australia aspirations.

But there are risks to Australia’s ability to compete. Faster approvals and greater government funding commitments may draw investment to the US rather than Australia. However, poor implementation or environmental and social backlash may undermine this competitive advantage.

Australia should be most concerned if the US successfully expands its raw outputs quicker than its downstream industry, as US mineral production could flood the market. In 2024, Australia saw similar effects of oversupply in the nickel market (largely due to Indonesia), leading to temporary shuttering of nearly all Australian nickel operations.

Australia will need to assess the risks presented by US production increases. The government must work with industry to protect our domestic production and assess whether demand-side policy responses, such as a national stockpile, will be needed.

Trump’s mineral policy puts America first. Australia must respond and engage directly with the US to negotiate collaboration and maintain fairness in the market. International forums, such as ASPI’s Darwin Dialogue, may become particularly important to achieving this.

The value of Ukraine’s critical minerals is overstated

Anyone involved in Australia’s critical minerals industry would be rolling their eyes at the transaction still reported to be under consideration between Ukraine and the United States.

US President Donald Trump was initially asking for the first US$500 billion in proceeds from Ukraine’s minerals development. Preliminary discussions spoke about the country’s critical minerals reserves being worth ‘trillions of dollars’.

As Lynas Rare Earths chief executive, Amanda Lacaze, said to The Australian:

In the time that I’ve been involved in rare earths, I’ve heard about a rare earth race to the moon because there could be lots of mining on the moon to get rare earths.

I’ve heard about a sort of rare earths race to the sea floor because there’s lots of rare earths on the sea floor, which could be useful in the future. I heard about a rare earths race to Afghanistan at one stage.

In fact, Ukraine has no proven rare earths reserves—as distinct from deposits, which may or may not be economically recoverable. Its only established rare earths deposit, of unknown size or quality, is near Azov, a town currently under Russian control.

Ukraine does have some other critical minerals, but nothing established to the point that it would warrant the investment of billions of dollars, let alone hundreds of billions or trillions.

Ukraine’s geological survey agency claims 19 million tonnes of reserves of graphite, used for batteries. China was the major world supplier of graphite, but it restricted exports last October in response to US controls on sales of semi-conductors.

Australian listed company Volt Resources holds 70 percent of Ukraine’s major graphite operation, the Zavallivsky mine, which has been active since 1934. However, its output is not up to lithium-battery standards. The scale of its operation is indicated by Volt’s market value of just $18 million.

Ukraine has more substantial deposits of manganese, but its output is barely a tenth of Australia’s and would earn it little more than $200 million a year.  Ukraine’s claims of critical minerals riches mainly rest on Soviet geological surveys done 30 to 60 years ago, not nearly recent enough to justify investment by Western financial standards.

Trump said Ukraine ‘holds no cards’ in negotiations over its future. Ukraine’s government essentially invented its mineral riches to give itself a card to deal with Trump.

With considerable foresight, Ukrainian President Volodymyr Zelenskyy used the D-Day ceremonies in France in June to lobby a key Trump ally and rare Republican supporter of aid to Ukraine, Senator Lindsay Graham. Zelenskyy told him that Ukraine’s minerals were worth as much as US$12 trillion.

‘If we help Ukraine now, they can become the best business partner we ever dreamed of’, Graham said. ‘That $10 to $12 trillion of critical mineral assets could be used by Ukraine and the West, not given to Putin and China.’

Graham repeated those comments after leading a Senate delegation to Kyiv, a few weeks before Zelenskyy travelled to the US last September. Zelenskyy’s visit was controversial: the Republican leader of Congress, Mike Johnson, refused to meet him, and Trump was expected to do the same.

After making a personal appeal to Trump, Zelenskyy was granted an audience at Trump Tower in New York. During this meeting, he evidently sold the idea of a minerals partnership, mentioning the potential revenue of US$500 billion.

Ukraine doubled down on these claims at this year’s World Economic Forum in Davos, Switzerland, where its delegation spoke of critical mineral reserves worth US$12 trillion. Trump took the bait, but Zelenskyy could not close the deal, despite guidance from Graham on how to handle Trump ahead of the ill-fated televised meeting on 28 February.

While Trump responded to the appeal of large numbers, the reality of critical minerals mining, and particularly rare earths, is that it is painstaking work. It takes years to prove up deposits, to determine how to process them, to secure customers and then, and only then, to raise the capital for development.

Australia has been discussing collaboration with the US on critical minerals ever since former prime minister Malcolm Turnbull’s first meeting with Trump in February 2018.

There has been follow-up: the US Department of Defense helped fund a Lynas joint venture to process heavy rare earths in Texas; the US Export-Import Bank provided conditional letters of intent to lend $1.3 billion to two Australian rare earths miners; and there has been collaboration between Geoscience Australia and the US Geological Survey.

The Albanese government agreed on the Climate, Critical Minerals and Clean Energy Transformation Compact with former president Joe Biden in May 2023. However, it was not formally ratified by US Congress ahead of the new administration, which will likely not appreciate the compact’s climate change focus.

While Japanese government support was pivotal to the success of Lynas, the Australian government has been left to put up the risk capital behind the development of recent Australian rare earths processing capacity.  There has been no influx of US risk capital.

Overseas investment is getting riskier. The government needs to step up

Australian companies operating overseas are navigating an increasingly volatile geopolitical landscape where economic coercion, regulatory uncertainty and security risks are becoming the norm. Our growing global investment footprint is nationally important, and the Australian government must support it more strongly.

The government needs to do this above all to counter market manipulation by China and even its seizure of Australian assets, but other risks are piling up, too.

Australia’s outward foreign investment is not just about business; it is a strategic imperative, with the country’s superannuation funds, trade stability and national security all tied to the success and resilience of its companies operating in high-risk environments around the world.

Many Australians understand the importance of inward foreign investment in driving economic growth, but far fewer appreciate the scale of Australian capital flowing overseas. Australia’s total investment abroad now stands at $3.8 trillion—82 percent as large as the stock of foreign direct investment in Australia.

Manufacturers, financial institutions and miners lead our outward foreign direct investment (FDI), the establishing or buying of businesses in other countries. It embodies Australia’s deep economic integration with global markets. Yet, as geopolitical risks intensify, Australia can no longer take the security of these investments for granted, especially in the mining sector.

Australian minerals companies have built a huge global footprint. S&P Global data shows that Australian-headquartered and ASX-listed companies operate 331 mines and downstream processing plants domestically and that 120 Australian companies manage 212 mining and processing facilities overseas.

In 2024 alone, Australian companies invested $4.6 billion in exploration, of which 53 percent spent in Australia and the rest on all other continents except Antarctica. The $195 billion in outbound mining FDI recorded in 2023 further illustrates the scale of this global presence, alongside $215 billion in manufacturing FDI, much of which is tied to minerals processing.

Australian miners have a long history of navigating complex global environments. However, rising geopolitical tensions, economic coercion and regulatory instability make risk management increasingly difficult. The sector’s dependence on foreign capital and markets leaves it vulnerable to supply chain disruptions, trade restrictions and political interference, which threaten profitability and long-term strategic resilience.

Front of mind here is China’s increasing economic coercion. China’s actions serve to reshape global minerals markets, creating risks that extend far beyond trade disruptions. Through market manipulation, aggressive acquisition tactics, and political interference, China is systematically undermining competition. It is attempting to seize control of critical minerals projects and even emboldening hostile regimes to detain Australian mining executives as leverage for financial gain.

Chinese-linked companies have used coercive tactics and state-backed influence to try to take control of Australian-owned mining operations, particularly in some African countries with weak governance in minerals. In 2024, an Australian company was awarded US$90 million in compensation after the Tanzanian government unlawfully seized a nickel deposit, highlighting the unstable regulatory environment Australian firms can face abroad.

Meanwhile, Russian-backed military regimes in Mali and Niger, combined with jihadist insurgencies in key West African mining regions, are increasing security risks for Australian businesses. The closure of US military bases in Niger in 2024 further complicated the security landscape, raising concerns about the long-term viability of Australian investment in these regions.

While the Australian government sponsors the West Africa Mining Security Conference, tangible support for Australian companies operating in high-risk regions is minimal. Unlike Canada, which maintains 17 trade offices across Africa, Australia has just one, in Nairobi. Despite Australia’s large mining and petroleum investments in West Africa, there is just one diplomatic post to service nine countries. This lack of diplomatic and commercial representation leaves Australian companies at a significant disadvantage in security and investment advocacy.

Meanwhile, escalating tariff disputes between the United States and China and retaliatory trade measures from Canada, Mexico and the European Union further complicate Australian companies’ investment and trade outlook. The full impact on Australian-controlled production at home and abroad remains uncertain but potentially severe.

Australian mining depends heavily on foreign investment and financial mechanisms, including cash-backed offtake agreements. China dominates the financing and sales mix, making it an essential partner and a strategic risk. China’s deliberate manipulation of mineral prices, particularly in rare earth markets, and its covert and coercive attempts to acquire key mining assets directly threaten Australia’s economic sovereignty.

Multiple takeover attempts of Northern Minerals and allegations of similar activities around control of Global Lithium Resources demonstrate China’s ongoing efforts to increase control over Australia’s critical minerals industry. This threatens national security and broader supply chain diversification efforts.

The Australian government must take decisive action in response to the rapid escalation of geopolitical risks.

First, a dedicated task force led by the Department of Foreign Affairs and Trade should provide real-time risk assessments and direct assistance to companies navigating complex security and regulatory environments. Second, the Australian Securities and Investments Commission must collaborate more closely with the Foreign Investment Review Board to detect and counter corporate coercion threatening Australia’s national interest. Third, Australia must prioritise deeper engagement with like-minded partners, including the US, Canada, Japan, the EU and South Korea, to accelerate the development of more secure, diverse and sustainable critical minerals supply chains.

While Australia has made cooperation commitments under multiple critical minerals agreements, implementation has been slow and inadequate. With global competition intensifying, there is no time to waste.

To avoid a Ukraine-style quid pro quo, Australia needs to work with the US on critical minerals

With Donald Trump back in the White House, Washington is operating under a hard-nosed, transactional framework in which immediate returns rather than shared values measure alliances. For Australia, this signals a need to rethink its approach to the US relationship.

A key step would be to work with the United States in the extraction and processing of Australian critical minerals. By partnering with the US in this area, and freeing both countries from reliance on China, Australia can solidify its alliance position. It can raise itself further above the level of Ukraine, whose vast reserves of critical minerals (including rare earth elements) have become a mere bargaining chip in negotiations with Washington.

Trump’s objective with Ukraine—a minerals-for-security quid pro quo—is emblematic of the new US foreign policy doctrine, in which assistance is granted not on principle but in return for something tangible. Since Australia is a top-four global producer of rare-earth elements, with reserves critical to US defence and technology industries, a question arises: could Trump demand a similar deal from Australia?

Australia should not wait for the request to come but rather put forward a strategy, or series of proposals with the US and other partners such as Japan, that are in the interests of itself and global security.

Unlike Ukraine, which seeks military aid to fight an immediate existential threat, Australia has an alliance with the US that is still based on the shared strategic interest of regional stability and deterrence of aggression. Articles III and IV of the ANZUS Treaty oblige the parties to ‘act’ in response to threats against the other, but interpretation of that has always been uncertain.

Under Trump’s America First doctrine, coming to Australia’s aid could be accompanied by a compensating demand for greater access to Australia’s rare earth elements, lithium, cobalt and titanium.

Unlike Ukraine, however, Australia is not merely a resource supplier. As a regional power with strategic assets of immense military value to the US, it has a far stronger bargaining position.

Trump’s approach to alliances is brutally simple: nations must prove their worth in tangible, immediate terms. This is where Australia has an advantage. Beyond critical minerals, it provides the US with something far more valuable: strategic positioning and intelligence infrastructure. Robertson Barracks in Darwin hosts rotational US Marine deployments, bolstering US force posture in the Indo-Pacific without the cost or political sensitivity of permanent basing. Joint Defence Facility Pine Gap is essential to US intelligence, surveillance, and reconnaissance, providing real-time missile warning and electronic signals intelligence that the US cannot easily replicate elsewhere. Harold E Holt Naval Communications Station is one of the US’s primary links to its submarines, securing its undersea deterrence in the Indo-Pacific. Northwest Cape and Cocos Islands radar installations are vital to US Space Command, tracking adversary satellites and space debris amid China’s expanding orbital footprint.

If Trump sees Ukraine’s rare earths as leverage, Australia must ensure that its strategic assets are recognised as even more valuable. The risk lies in failing to assert this before any transactional demands are made.

Australia cannot afford to passively assume alliance obligations will hold under a leader who views diplomacy as a business process. Instead, Canberra must shape the terms of engagement, reinforcing why its role in the Indo-Pacific delivers more long-term value to the US than simple access to its minerals. This requires a more assertive, transactional approach that speaks Trump’s language of hard bargains while safeguarding Australia’s sovereignty.

Australia should pursue a strategic critical minerals agreement with the US that reduces both nations’ dependence on China’s dominance of rare earth supply chains and processing. A deal that prioritises joint investment in refining and manufacturing capacity, rather than just raw material supply, will strengthen sovereign capabilities, enhance supply chain resilience, and ensure long-term security for both economies.

This type of practical initiative would complement Canberra’s framing of the alliance as one of true partners, with emphasis on joint military infrastructure, intelligence cooperation and Indo-Pacific stability as assets of equal value worthy of security guarantees. Strengthening leverage before negotiations are forced to start by some third-party action is essential to ensuring the US recognises that Australia’s strategic geography, intelligence facilities and force integration are irreplaceable advantages.

Expanding resource partnerships with like-minded nations such as Japan and EU members will reduce dependency on any single power’s economic coercion tactics. Pre-emptively signalling non-negotiable red lines will reinforce that while Australia is willing to cooperate, access to sovereign resources cannot be dictated under duress.

For the US, Ukraine’s rare earths are a short-term geopolitical play. In contrast, Australia’s strategic positioning and alliance role are long-term necessities. As the Indo-Pacific becomes the central theatre for global competition, the US needs Pine Gap, RAAF Tindal, HMAS Stirling and Robertson Barracks. The difference between Ukraine and Australia lies not just in geography but in bargaining power. In Trump’s transactional world, Australia must ensure it negotiates from a position of strength, not subservience.

How Australia, with friends, can secure its place in critical minerals

Australia’s critical minerals sector is at a crossroads. As the United States recalibrates its industrial policies under President Donald Trump, Australia’s role in securing non-Chinese supply chains for critical minerals has never been more important.

To secure its critical minerals industry in partnership with friends such as the US, Australia must ensure US trade policies actively support its push to move up the value chain. It also needs a strategy to sustain key production during downturns, must better align critical minerals, defence and industrial policies, and it should push for stronger reciprocal investment from allies, especially in processing and refining.

While Australia is at the centre of such initiatives as the US’s Minerals Security Partnership and AUKUS, practical outcomes such as viable new supply chains depend on targeted investment and policy coherence. The 2024 suspension nickel mines in Western Australia and ongoing challenges in rare earth and lithium processing expose serious vulnerabilities. Australia risks becoming a weak link in the supply chain, rather than a strategic powerhouse.

Established in June 2022, the Minerals Security Partnership was designed to promote responsible mineral production and processing among partner countries. Joe Biden considered Australia a key part of this vision, but Trump’s return adds uncertainty. While his administration is pushing for reduced dependence on China, his inward-looking trade policies could unintentionally harm Australia’s contribution.

If tariffs extend to processed or refined critical minerals, as they cover aluminium, Australia may be discouraged from moving up the supply chain. As of 2023, Australia supplied about half of the world’s raw lithium but lacked the processing capacity to realise the material’s full value. Mineral refining remains a weak point; China dominates the sector. Australia needs investment to compete, and the US is the partner of choice. Yet Australia supplies relatively few critical minerals to the US, limiting its leverage​.

At least five Western Australian nickel mines suspended operations in 2024 due to global oversupply and falling prices. The closures resulted in major job losses and raised concerns about supply chain resilience.

Nickel is a strategic material, with uses in batteries and defence. Indonesia, the world’s top nickel producer, is aligning itself closely with China and has joined the BRICS. So declining production in Australia is a strategic misstep.

Rather than waiting for market forces to decide the fate of its nickel industry, Australia should have used its 2023 critical minerals strategy to stabilise production. More importantly, countries in the Minerals Security Partnership, particularly the US, should have stepped up and invested in Australia’s mining and processing capabilities. Friend-shoring needs to be more than just rhetoric.

Despite setbacks in nickel, Australia is making progress in rare earths. Lynas Rare Earths is expanding its processing facilities in Kalgoorlie, and Iluka Resources is developing Australia’s first fully integrated rare earths refinery at Eneabba. Federal funding supports these projects.

China controls more than 90 percent of the world’s rare earth refining. It also has used export restrictions and bans as a geopolitical tool.

Australia’s Critical Minerals Production Tax Incentive—a 10 percent tax credit for onshore processing—raises serious questions. Since Australia lacks a viable downstream industry, such as refining, alloy production, or manufacturing, these processed materials still go to China. Australian taxpayers are just subsidising the middle stage of the supply chain, only for China to capture the higher-value downstream benefits. Without a full industrial chain, this policy doesn’t create real resilience in supply; it just makes Australian critical minerals slightly cheaper for China.

Australia’s critical minerals strategy also affects its national security one. Nuclear submarines rely on more than a dozen critical minerals, including rare earths for sonar systems, cobalt for high-performance batteries and titanium for hull construction. Other advanced defence systems depend on stable critical mineral supplies.

Securing these materials requires a coordinated approach. The US, through the Defense Production Act, can prioritise domestic mining, refining and processing of key materials for defence and high-tech industries, reducing reliance on imports from potentially hostile nations. In 2024 Australia was designated as a domestic source for funding, showing the potential for deeper collaboration and greater supply chain resilience.

If the US and Britain see Australia as a long-term defence partner, they should be investing in its critical minerals sector. AUKUS should be a platform for strengthening Australia’s industrial base, including processing and refining critical minerals.

Australia’s approach to critical minerals is guided by a suite of strategic policies and documents that play a role in securing supply chains, strengthening Australia’s industrial base and strategic position, but better alignment is needed.

Closer coordination of critical minerals policy with its defence, industry and trade strategies can revitalise capacity in the industry while helping to diversify mineral supply chains away from China.

Australia can’t afford to take a passive approach. Global supply chains are shifting fast. If Australia wants to be a cornerstone of Western critical mineral security, it must act decisively and demand that its allies do the same.

Northern Australia strengthens its role in economy and energy security

Each day, more than 160 airline flights carrying 13,000 passengers take off and land at Perth Airport to and from destinations across northern Australia. They ferry skilled workers to and from minerals and energy operations. Darwin and Brisbane airports also host air services to and from northern Australian resources hubs.

This provides a real-time indicator of the health of the Australian resources sector, which is overwhelmingly concentrated north of the 26th parallel.

In 2023-24, aircraft and passenger movements between Perth and Western Australian destinations exceeded interstate traffic for the first time, pushing the airport to new throughput records.

Despite price weakness for some minerals, the resources sector remains healthy. Northern Australia’s minerals maintain outsized importance in the national economy and for state and federal government revenues.

The Department of Industry, Science and Resources’ latest Resources and Energy Quarterly, released in December 2024, highlights the fact that the minerals and energy sector generates two thirds of national exports and 11.4 percent of GDP.

Northern Australia’s minerals and energy dominance makes it central to the national resources sector and thus much of the Australian economy. In 2023–24, the combined value of the top four exports from northern Australia—iron ore, liquified natural gas (LNG), metallurgical coal and thermal coal—was $261 billion, or 63 percent of total resource exports.

Northern Australia contributes almost all the nation’s iron ore exports, expected to total more than 900 million tonnes in 2024, or some 56 percent of global seaborne trade in the commodity.  Export value is about $140 billion. While iron ore prices are expected to soften in 2025, volumes are forecast to rise. The Pilbara remains by far the largest iron ore production centre in the world.

Metallurgical coal is northern Australia’s next largest export by tonnage, with the north contributing 46 percent of global supply. All 81 million tonnes of the nation’s LNG exports in 2023-24, worth $69 billion, came from northern Australia. This supply is vital to the energy security of economies such as Japan, Taiwan and South Korea.

Exploration spending is the long-term bellwether for the minerals industry. According to S&P Global data, northern Australia hosts 803 of more than 2000 exploration properties in the country. Australia-headquartered companies operate 632 of them. Identified reserves and resources in exploration properties are valued at $14 trillion.

While data is unavailable on mineral and petroleum exploration spending for northern Australia as a region, there is an indicator in the trend in the Northern Territory, where mineral exploration budgets were up 86 percent in the five years to 2023-24. The search for deposits of critical and strategic minerals such as lithium, copper and uranium drove the rise.

S&P Global records 163 mines in northern Australia, including those under construction. Outputs include copper, lithium, zinc, phosphate, vanadium, manganese, rare earths, gold, and metallurgical and thermal coal. The 11 secondary processing plants in northern Australia produce refined products such as alumina and metals including aluminium, copper and zinc.

Northern Australia, with abundant land and sunshine, is already a major source of renewable energy, with high potential for very large-scale production. From the Pilbara to the central Queensland resources hub, mines and mineral processing plants are increasingly sourcing energy from solar generators, backed by coal or gas. Whether exports of electricity and products such as green hydrogen are viable and will find markets remains to be seen.

While northern Australia’s minerals and energy future and its national economic contribution remain very positive, the region faces challenges in sustaining and growing production. As a December ASPI report highlighted, the region is vulnerable to natural disasters, particularly as some of its infrastructure is inadequate in the face of severe weather events. The government needs to spend more to maintain vital transport links as well as energy and telecommunications services.

Federal and state project assessment and approval processes have improved during the past decade and must continue to do so while maintaining scientific rigor. Efficient coordination between levels of government and between agencies is vital.

New lower-cost LNG supply from the United States and Qatar puts pressure on Australian LNG projects and their host governments to control costs of both construction and operations.

Several critical minerals projects in northern Australia have been held back by depressed and volatile prices, largely due to market manipulation by the current dominant producer, China. Australia and like-minded governments are working together to underwrite the commercial viability of such projects so they can attract global financing and move to construction and operational phases.

The thousands of workers who commute by air to, from and within northern Australia are testament to the strength of the resources sector, but also highlight the region’s chronic shortage of resident skilled workers. More locally and regionally based workers will help northern Australia capture greater value from its industries. The liveability of the north’s cities and towns is key to attracting and retaining more people.

The daily stream of jets from major population centres to northern Australia, however, will remain the main source of skilled people that contribute so much to the national economy and its energy security.

Conflicting interests and geopolitical competition in Pacific deep sea mining

Deep sea mining is emerging as a new frontier of resource extraction. A race is underway for underwater resources with important economic, environmental and geopolitical implications.

For Pacific island countries, deep sea mining offers economic opportunities and international leverage but risks severe ecological damage. It could reshape regional alliances and traditional power dynamics as China advances its activities to secure critical minerals and bolster its influence. The US faces challenges in maintaining stability and countering Beijing’s influence.

In the Pacific Ocean there are vast reserves of critical minerals, such as cobalt, nickel and other rare earth elements, that raise national security concerns due to their technological uses. For example, these minerals have applications in such renewable technologies as electric vehicles, solar panels and wind turbines, and in defence technologies such as missiles, aerospace parts, magnetic systems and radar. Competition for critical resources complicates American and Chinese tussles for influence in the Pacific and regional and global concerns about energy transitions and environmental degradation.

With rich deposits of minerals in their exclusive economic zones, deep sea mining promises Pacific islands wealth, enhanced international status and leverage—for example, through influence in negotiations or economic bargaining power. Experts have determined that the value of seabed minerals could reach up to US$20 trillion.

However, the potential economic benefit must be weighed against ecological damage and natural resource depletion. Studies have shown that the disruption of deep-sea ecosystems, whether on abyssal plains or hydrothermal vents, could harm deep ocean biodiversity and affect fisheries, such as tuna stocks, that local communities rely on for food and income. Also, sediment plumes and waste from mining activities could diminish water quality, posing risks to tourism, a vital economic sector for many island nations.

Deep sea mining is dividing the region and may impede cooperation. Nauru and Tonga have each granted exploration licenses to subsidiaries of The Metals Company, a Canadian company that specialises in deep sea mining exploration. Kiribati’s state minerals exploration company has an agreement to sell deep-water tenements to The Metals Company.

Cook Islands is moving cautiously, still looking at the feasibility of deep sea mining. And the Melanesian Spearhead Group, which includes Fiji, PNG, the Solomon Islands and Vanuatu, has instituted a moratorium on it. Its members worry about environmental degradation and damage to marine ecosystems, which are at the heart of their cultural identity and livelihoods.

The International Seabed Authority is the multinational organisation responsible for creating a regulatory framework and overseeing deep sea mining. Other stakeholders, including Pacific governments, mining corporations and environmental advocacy groups also play roles in shaping the region’s approach to deep sea mining.

China has positioned itself as a leader in deep sea mining for access to resources and to gain favour with Pacific island states. Beijing’s strategic engagements with Tonga and Nauru on infrastructure investments and financial aid, and with Kiribati on fisheries and maritime domain access, reflect China’s efforts to expand its Belt and Road Initiative into the Pacific to develop economic dependence. Increased influence would allow China to shape international seabed mining regulations, secure and dominate access to minerals necessary for green energy technologies and defence systems, control strategic maritime routes and potentially establish a military presence in the region.

From a US perspective, China’s activities in the Pacific threaten its regional influence. Its growing presence has implications for US interests and military operations. The US needs to monitor China’s activities and develop strategies to counterbalance Beijing’s influence and reassess its own approach to deep sea mining to maintain competitiveness and sustainability.

Developing precautionary deep sea mining policies would allow the US to lead responsibly and in doing so strengthen Pacific partnerships. Through collaboration that balances economic opportunities with environmental responsibilities, the US and the Pacific islands can align policies and mutual interests, fostering relationships built on mutual respect. This strategy would not only ensure that resource extraction supports long-term regional stability, environmental preservation and partnerships, but would counter Beijing’s influence.

Critical Minerals Security Partnership may not be enough for Australia

Fourteen countries this week took what they intended to be a big step in countering China’s dominance of critical minerals supply. But it’s unclear whether the initiative will restore competitiveness of Australian production and investment in the face of massive subsidies offered by China and, in response, the United States.

The Minerals Security Partnership, a coalition of 14 countries, including the G7, Australia, India, South Korea, and European Union members, announced plans for a finance network to boost investment in critical metals. The initiative will tap into domestic export credit agencies and development finance institutions to attract private sector capital to produce, extract, process and recycle critical minerals, especially in riskier markets. The partnership seeks to lower investment risks and drive global supply chain resilience by providing guarantees and concessional financing.

Australia’s economic prosperity and national security are intrinsically linked to the exploitation of its abundant resources, notably critical minerals. These minerals are the new oil. They’re the building blocks for everything from emerging technology to energy transition. Although Australia has vast reserves, its critical mineral mining and processing are still threatened by the intense subsidy war between the US and China.

For decades, the Chinese Communist Party (CCP) has used state subsidies to establish and then entrench its dominance of global critical mineral supply and value market chains.

China’s subsidies for critical minerals, while opaque, are nevertheless clearly substantial. Industry experts estimate that Chinese subsidies could cover anywhere from 20 percent to 40 percent of the total project costs for critical mineral mining and processing, depending on the specific mineral and region. For example, the domestic rare earth element sector gets direct grants and low-interest loans. Other examples of support are deeply discounted electricity rates, access to cheap land and cheap finance, as well as providing tax benefits and stockpiling.

With reduced operating costs, these companies can operate in market conditions that are too difficult for others. The Chinese producers can thereby control global processing capacity.

In response to growing geopolitical tensions with China and a push for energy security, the US government implemented substantial financial incentives of its own. Under the Inflation Reduction Act, the US committed more than $369 billion to clean energy and climate-related initiatives, including massive subsidies for the domestic production and processing of critical minerals.

Amid such foreign industry intervention, Australia’s production costs are, on average, higher than those in the US in refining critical minerals and much higher than those of Chinese companies. In May 2024, the Australian government announced a temporary Critical Minerals Production Tax Incentive to provide eligible recipients with a refundable tax offset of 10 percent from 2027 to 2040 for the costs of processing 31 currently listed critical minerals. This partially offsets the disparity created by the US Production Tax Credit, which offers a 10 percent production subsidy. Regardless, broader US tax incentives could still effectively reduce US production costs by 30 percent or more.

Australia has positioned itself as a reliable and ethical supplier of critical minerals, particularly to US and European markets looking to diversify away from China. However, the high capital expenditure required for mines and the cost-intensive process of refining and processing minerals means that Australian companies will still struggle to compete with their US and Chinese counterparts.

For example, building a lithium processing plant in Australia could cost nearly $1 billion. This is hard to justify without a clear and favourable return on investment. In contrast, a company setting up a similar operation in the US or China might see its costs slashed by hundreds of millions thanks to government subsidies. It’s unclear whether financing via the new coalition and the Australian tax incentive will be enough to address this challenge.

Ironically, US and Chinese subsidies have both made it harder for other nations to diversify their critical mineral sources.

Without a detailed understanding of the true scale of foreign subsidies, Australia risks underinvesting in its critical minerals sector, failing to attract the necessary capital and investment to scale projects vital to its economic future.

Developing resilient, competitive, ethical alternative critical mineral supply chains is about more than just resource access. Instead, the issue is access to financial and technological means to competitively mine, refine and process these minerals at the lowest cost.

If Australia wants to play a meaningful role in the critical minerals supply chains of the future, it must start by understanding the subsidy landscape in which it operates. If the US wants to truly break the CCP’s entrenched control over critical minerals and its ability to weaponise them, then it must support global, not national, supply chains.

Australia needs to be economically as well as strategically like-minded on critical minerals

Chinese-owned Tianqi Lithium last month argued that it was a ‘like-minded’ foreign investor in Australia. This invited close consideration of the somewhat contradictory aims Australia is currently pursuing in the critical minerals sector. It should make us better examine how we might resolve them.

The notion that a Chinese company fits the ‘like-minded’ bill is obviously at odds with how Canberra and other governments increasingly apply that term. This typically argues for greater pursuit of trade and investment with politically aligned countries at the expense of mere economic expedience. It particularly seeks reduced Chinese engagement, to create ‘trusted’ global supply chains.

Advancing commercial ties with strategically likeminded countries—otherwise known as ‘friendshoring’—has become central to Australia’s critical minerals policy in the past few years. This is clear enough in our having joined initiatives such as the US-led Minerals Security Partnership (MSP), which aims to build new trade and investment ties among an exclusive group of advanced democracies.

It is, on the other hand, possible to see how Tianqi’s interest at least satisfies a concurrent expectation government and industry have placed on Australia’s critical minerals activity: that we derive increased returns from our geological endowment, especially via greater processing and manufacturing. Tianqi has delivered on this value-adding imperative through its lithium hydroxide plant in Western Australia, which started producing battery-grade product last year.

The context in which Tianqi invoked likemindedness is also vital. It came as the company was mulling a potentially enhanced takeover bid for Australian lithium interest Essential Metals. It also came shortly after Australia’s Foreign Investment Review Board (FIRB) blocked a bid by China’s Yuxiao Fund to increase its stake in rare-earths company Northern Minerals on national security grounds.

There is a more intense strategic rationale for increased FIRB scrutiny of rare earths over other critical minerals: China has a broader and deeper value chain presence, and rare earths are particularly vital to defence applications. It is, however, also easy to see the tide shifting in favour of the FIRB limiting further Chinese interest in lithium, or other minerals vital to the economic sectors Australia is eager to grow.

Cutting off a source of capital would be less a problem if Australia were assured of reaping an alternative bonanza from friendshoring. There was good news on that front this week, with US-based Albermarle (Tianqi’s partner in the world’s largest lithium mine, at Greenbushes in Western Australia) announcing its own expanded lithium hydroxide investment.

Yet continued progress will be hard won. Politically aligned countries agree on the general principle of creating trusted supply chains. They are, however, actively positioning themselves to fight over the economic spoils of reshoring activity from China.

Australia’s most intense concern in this regard continues to stem from its most politically likeminded partner of all, the US. Washington’s Inflation Reduction Act (IRA), introduced in 2022, is already helping to unleash American clean energy potential. It incentivises US manufacturers to invest in Australian critical minerals. Its massive subsidies for largely downstream activity may, however, also draw investment from our own processing and manufacturing ambitions. This could help confine us to a familiar role as the quarry to more diversified major economies.

One part of Australia’s response to this quandary must be to lobby Washington, and other friends, for concessions that encourage their companies to invest more in our onshore value-adding activities. Another may need to be maintaining a tight definition of what constitutes a national security threat to the critical minerals sector, at least while interest from other partners grows.

Yet Australia must also take on much of the responsibility for ensuring we attract beneficial international partnerships. We should significantly improve the incentives we offer domestic industry to work with counterparts in politically aligned partners, particularly where it supports value-adding.

Canberra has so far been content with raising the spectre of further FIRB crackdowns and urging Australian companies to seek partnerships in trusted countries, even where these companies see little commercial incentive to do so. We have elsewhere liberalised access to our critical minerals—as with the recent India-Australia trade agreement—without particularly thinking about how this will translate into investments downstream from mining.

Australia can’t easily replicate something like the US IRA in scale. We also can’t directly copy its friendshoring mechanism of subsidising ties with free trade agreement partners, because we have an FTA with China. We can and should, however, adopt the general approach of offering tangible rewards for industry members that form politically desirable cross-border ties. We also shouldn’t shy away from seeking a greater share of the economic pie while doing so.

Canberra should make more support to domestic industry contingent on meeting its cross-cutting goals for the critical minerals sector. Mechanisms such as the Critical Minerals Facility have already prioritised investments that advance value-adding. They could provide further funding incentives for Australian companies to do this at the same time as working with partners in MSP countries. This, indeed, would directly accord with the MSP mantra of ensuring activity ‘supports the ability of countries to realise the full economic development benefit of their geological endowments’.

A growing number of strategically aligned countries are looking to work with Australia on creating trusted critical minerals supply chains. Yet we need to ensure our participation in this process remains in the broader national interest. Applying greater vigilance to Chinese investment in the sector is prudent. Yet it is potentially counterproductive without commitments that can ensure alternative partnerships are economically as well as strategically likeminded.

Northern Australia has abundant critical minerals—now to process them

The Northern Territory has the critical minerals our nation, and the world, need—and the NT government is working hard to support their exploration and development.

The mining sector provides significant economic contributions and employment opportunities, especially in our remote regions. Capitalising on our natural resources while their demand grows worldwide is a priority.

Critical minerals will help tackle climate change and reduce emissions globally through the technologies they support. They are also crucial to Australia’s defence, and their supply chains must be secured.

There’s huge potential for mineral-rich nations to lead this journey, which presents an incredible opportunity for Australia, and especially for the NT, where these minerals are economically proven, produced and exported.

Our vast geological catalogue of critical minerals features aluminium, cobalt, copper, lithium, magnesium, manganese, molybdenum, nickel, phosphate, rare-earth elements, titanium, tungsten, vanadium, zinc and zirconium.

There’s also high potential for another 13 minerals—antimony, bismuth, gallium, germanium, graphite, helium, high-purity alumina, niobium, platinum-group elements, scandium, silicon, tantalum and tin—to be declared critical.

Already the Territory hosts the world’s largest producer of manganese, Groote Eylandt Mining Company. McArthur River Mine, operating since 1995, is the world’s fourth largest zinc mine, and Core Lithium’s Finniss project is Australia’s only producing lithium mine outside of Western Australia.

There are another nine critical minerals projects in the Territory at various stages of planning and development, including Arafura Rare Earths’ Nolans project, which has all major approvals in place and is now targeting final investment. Nolans, to mine phosphate and rare earths in central Australia, is on track to be the nation’s first integrated mine and rare earths separation plant.

Reaching these development milestones hasn’t been without challenges, and that will remain the case unless industry and government collaborate. It’s important to recognise that the industry is operating in an increasingly hostile environment because of general activism against the sector. Despite resource extraction enabling all our changed futures, this environment is in part due to a lack of trust by the community based on isolated events and the perception that the industry operates unsustainably, without the permission of traditional owners.

Access to capital and regulatory uncertainty are also proving challenging for the industry, particularly for junior companies without large commercial backing or the specialist expertise sometimes required to make sense of the evolving approvals landscape.

One challenge the industry experienced in the Territory has been addressed and the solution is showing great success. The remoteness of our natural resources has meant the NT is underexplored for critical minerals. Our $9.5 million Resourcing the Territory program awards co-funding annually to projects that address scientific knowledge gaps, advance exploration activity and support the discovery and development of resources.

The need to alleviate other challenges and operational pressures the industry faces is urgent. The Mineral Development Taskforce, established by the NT government in 2021, has been conducting a comprehensive review of the Territory’s mining regulations to identify efficiencies and improvements and is developing strategies to rebuild community trust and confidence. Its final report will be delivered soon with recommendations for the government to address these issues and general barriers to investment in new mining and downstream processing.

States and territories, particularly a smaller jurisdiction like the NT, can only do so much to create a positive investment environment. As multibillion-dollar funds to advance decarbonisation technology and renewable industries continue to be launched overseas, Australia must keep pace. The federal government can play a crucial role by rapidly developing the critical minerals industry sustainably so that it can deliver enough resources to match demand.

If it’s not feasible to stand up a fund to attract industry to Australia, many other practical solutions can be deployed. Building on the success of the Resourcing the Territory program, a similar fund could be established to continue government support at the feasibility stage. Government backing is highly favoured when investment decisions are being made, with projects more likely to progress to construction. Consideration could also be given to tax incentives to support downstream processing and manufacturing.

Given the remoteness of mineral activity, and the interruptions that can be experienced as a result, providing access to quality infrastructure will only increase output. Resilient transport routes, telecommunications and other common-use infrastructure will enable fast and secure supply chains from the point of extraction to processing.

The NT government is progressing its own world-class processing solution through development of the Middle Arm Sustainable Development Precinct. The project, with $1.5 billion of Commonwealth government support, will be home to low-emissions industrial processing linked directly to existing export infrastructure. Master-planning work is already underway to ensure the precinct meets the industry’s development needs.

In addition to practical solutions, there needs to be a promotional effort that the federal government must lead, particularly through Austrade and Export Finance Australia. Feedback from international stakeholders has told us in the Territory that the quality and volume of the critical minerals available across Australia are not well understood. International trade is crucial to all state and territory economies. The value of partnering with these federal organisations and showcasing our capability directly to our current and future trade partners cannot be underestimated and must be urgently progressed.

By working together, Australians have a very real opportunity to be at the forefront of the world’s critical mineral supply. There’s significant opportunity for each state and territory to contribute to our overall success. The NT government is pursuing all options to ensure the Territory is globally competitive and is excited by the opportunities for growth that developing this industry will provide.

On 12–14 April, ASPI, with the Northern Territory government’s ‘Investment Territory’ program, will host the inaugural Darwin Dialogue. The 1.5 track dialogue will bring together government, industry and academia representatives, including delegations from Japan and the United States, to discuss establishing secure supply and value chains for mining, processing and refining critical minerals outside China.