Australia is positioning itself to take further strides in the rare earths sector. The aim is to reduce dependence on China, which currently has a vice like hold on the global supply chain. Iluka Resources, a global mining heavyweight, is walking the talk on some radical moves. To keep up with this increasing demand, they have even announced plans to build a new refinery. The Australian government is highly supportive of this initiative, seeing it as part of a bigger picture. Their vision is a more self-reliant supply chain for these essential materials.
Iluka Resources has a stockpile of 1 million tonnes of rare earths on hand, which are worth more than $650 million. Rare earths are important for producing alloys of elements needed to create specialty magnets. These 17 known elemental properties make them some of the lightest, strongest, and heat-resistant materials on earth. Today, China makes up over 70% of rare earth mining and over 90% of processing. This overwhelming market dominance creates real threats for nations such as Australia. The European Union is in a tight spot, as it depends on China for around 98% of its rare earth supply. The United States is equally affected, with 80 percent of its rare earth imports coming from China.
The overall demand for rare earths is skyrocketing, with an expected growth of 50-170% by the end of this decade. In reaction to this influx, the Australian federal government is increasing its assistance to address this surging demand. It has now fully committed A$1.65 billion, about $1 billion or £798 million. This funding will accelerate the construction of Iluka’s new refinery. Even if the facility is awarded, it would take another two years to build and go into operation.
Iluka Resources might not be a household name, but this company has been mining zircon in Australia for decades. Now, the company is changing its tune to enter the rare earths business. The firm has seen the recent trend of a large influx of inquiries from automakers. They are looking forward to guaranteed access to rare earth materials when the refinery starts producing. A recent disruption of supply of rare earths has caused one car producer to stop production temporarily. Within this context, the call for a continuous stream of supply has never been clearer and timelier.
Rest assured that China is playing the long game. As Jacques Eksteen points out, the country is aware of the advantages and committed to funding its booming rare earths industry.
Dan McGrath, a representative from Iluka Resources, emphasized the crucial role of the Australian government in this initiative: “Without the strategic partnership we have with the Australian government, a rare earths project would not be economically viable.” He further added that the refinery represents an alternative to China’s market dominance, stating, “This refinery and Iluka’s commitment to the rare earth business is an alternative to China.”
This impacts the major industries dependent on rare earths including defense, renewable energy and electric vehicles. At the same time, China has recently relaxed rules on rarer earth exports. That’s why continuing shocks to the supply chain remain a threat to hundreds of automakers throughout Europe. Professor Eksteen remarked on this precarious situation: “Somewhere in the supply chain you’ve got one or maybe a few countries controlling that bottleneck.”
Australia’s Minister for Resources, Madeleine King, emphasized the importance of building a domestic rare earths industry: “We can either sit back and do nothing about that… or we can step up to take on the responsibility to develop a rare earths industry here that competes with that market.” She underscored that “the open international market in critical minerals and rare earths is a mirage.”
The drive to set up a strong rare earths industry in Australia is an example of a smart industrial policy by the government. It acknowledges the strategic importance of these materials, both for high-tech applications key to U.S. economic competitiveness, as well as for national security. This dependence on one country for massive quantities of critical minerals raises red flags about the security of the supply.
Looking ahead, McGrath stated, “We expect to be able to supply a significant proportion of Western demand for rare earths by 2030. Our customers recognize that having an independent, secure and sustainable supply chain outside of China is fundamental for the continuity of their business.”