Australia’s 15 projects aim to break China rare earths dominance
Canberra has identified 15 rare earth and critical mineral projects it aims to champion as part of joint Australia-US efforts to challenge China’s dominance in the supply of materials commonly used in the defence and high-tech industries.
A government report published on Tuesday detailed the projects, which have been proposed by more than a dozen mining and metals companies and would require A$5.7bn to develop. They cover critical minerals including rare earths, antimony, magnesium and tungsten — the global processing and supply chains for which are all controlled by China.
Linda Reynolds, Australia’s defence minister, said: “The critical minerals sector is vital for defence, with many of our advanced capabilities depending on them. That means it is essential we have a secure source of supply, especially given the current geopolitical headwinds.”
She said the government was working with companies to ensure the policy settings were right to encourage expansion. There is no state investment planned at this stage, according to the report, though it is not explicitly ruled out.
Rare earths — a group of 17 obscure minerals that are embedded in most technology products — and critical minerals such as cobalt, magnesium and tungsten have been thrust into the centre of the US-China trade war following warnings by Beijing that it could cut off supply as leverage. China accounts for almost 80 per cent of the global mined supply of rare earths.
As part of efforts to reduce the reliance of western companies on Chinese supplies, Canberra and Washington signed an agreement last year to work together to extract, process and develop rare earths. Last week Ellen Lord, the Pentagon’s under-secretary of defence for acquisition and sustainment, told reporters that Australia was “one of the highest potential avenues” to work with on rare earths.
The 15 development projects identified by the Australian government include plans by Australia-listed Northern Minerals to build a rare earths mine and processing plant in Western Australia. Last month, the company sealed an offtake agreement with Germany’s Thyssenkrupp Materials Trading.
Wolfgang Schnittker, chief executive of Thyssenkrupp Materials Trading, said: “Northern Minerals Limited is one of the few suppliers of rare earths outside China, so we are really looking forward to a successful collaboration between the companies.”
Australia is already the world’s largest supplier of lithium, a vital mineral in electric vehicle batteries. But analysts have cautioned about the expenses and challenges of developing the mines and processing plants for rare earths and critical minerals.
Jeffrey Wilson, research director at the Perth USAsia Centre, a think-tank at the University of Western Australia, said: “This report reads like an à la carte menu for foreign investments looking at the sector. But these projects are risky because the prices are set by policy decisions made in China.”
US miner Molycorp, which operated the Mountain Pass rare earths mine in California, collapsed in 2015 with liabilities of A$1.7bn.
In 2016, Lynas, the last big non-Chinese supplier, was saved when shareholders including state-owned Japan Oil, Gas and Metals National Corp agreed to a debt restructuring. The Australian group controls just over 10 per cent of the global rare earths market.
In a recent note, Dylan Kelly, analyst at Ord Minnett, wrote: “As the world’s largest ex-China producer [Lynas’s] strategic importance cannot be overstated.”