With Its Critical Minerals Strategy, Australia is Trying to Free Itself from China - Latest Global News

With Its Critical Minerals Strategy, Australia is Trying to Free Itself from China

Australia is home to many of the world’s richest critical mineral reserves.

In addition, the country is a major producer of raw materials and aims to become a major player in the global critical minerals sector.

Investments in processing and production capacity, as well as support measures and international alliances, aim to reduce the country’s dependence on China, which currently dominates the market.

Why are critical minerals important in the global minerals space?

Critical minerals are the oil barrels of the 21st century.

The top five critical minerals today are lithium, cobalt, copper, nickel and rare earth elements (REEs).

REEs are elements that belong to the lanthanide series of the periodic table.

REEs and critical minerals are essential for consumer electronics and energy transition technologies (e.g. batteries, semiconductors and wind turbines).

Their demand is mainly driven by the net zero targets of developed countries. Therefore, their role in the supply chain contributes to the economic prosperity and national security of these countries.

Australia’s position in the critical mineral supply chain

A country being a leading producer of raw materials is not enough to position itself in the global critical minerals sector.

It needs to make investments to become a downstream processor.

While Australia is well positioned in terms of critical mineral reserves, the country is struggling to become a preferred supplier to the downstream global market.

More investment needs to be made in processing and manufacturing capacity.

As a first step, Iluka Resources committed to building Australia’s first RRE refinery in April 2022 to diversify the country’s supply of key minerals outside of China.

In March 2024, the Australian government agreed to invest A$840 million (US$550 million) in the Arafura rare earths project in central Australia to develop the country’s first combined rare earths mine and processing plant.

Politics will also play a role in Australia’s plan.

Policies and incentives must target foreign investment and the country’s control over its resources, but they must also take into account mitigating national security risks.

In June 2023, the Australian Government released its Critical Minerals Strategy 2023-2030 initiative, setting out its vision for the growth of Australia’s critical minerals sector.

Later in December 2023, Australia and the US entered into an alliance, the Critical Minerals and Clean Energy Transformation Compact, to enhance collaboration on policies and investments in the critical minerals supply chain.

Competition with China

Behind Australia’s investments and policies is the primary goal of reducing dependence on China, which has dominated the global supply of critical minerals for decades.

This means Australia is less exposed to fluctuating commodity prices.

According to leading data and analytics firm GlobalData in its Critical Minerals report, China currently accounts for over 60% of REE mining, over 80% of rare earth refining and processing, and more than 90% of rare earth magnet production.

China has large critical mineral reserves, supported by extensive government funding and relaxed environmental regulations.

As a result, China dominates much of the critical mineral refining and processing market.

Australia is already a strong competitor in the lithium minerals market. However, the country’s rare earth industry is less developed than China’s.

Nevertheless, Australia’s mineral wealth offers a major opportunity to diversify mineral supply chains outside of China.

Australia has what it takes to compete with China, but government funding, regulatory support and international cooperation will be crucial.

“Australia’s critical minerals strategy seeks to break free from China” was originally created and published by Mining Technology, a brand owned by GlobalData.

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