In brief
With China halting rare earth exports, Australia’s Prime Minister Albanese has unveiled a strategy to develop a critical minerals reserve to secure technology supply chains.
Australia's Prime Minister Anthony Albanese is making headlines with a bold A$1.2 billion (£580 million) plan to create a strategic reserve for critical minerals, including rare earth elements. This announcement comes in the wake of China's decision to impose restrictions on the export of seven rare earth elements, pivotal for advanced technology such as electric vehicles, fighter jets, and robotics. Albanese's proposal is seen as a response to increasing trade tensions, particularly following US tariffs on Chinese imports.Rare earths are a group of 17 elements that are notoriously hard to extract and refine, making them "rare." Australia is rich in these resources, alongside other crucial minerals like lithium and cobalt, but China dominates about 90% of the world's rare earth refining, thus controlling the supply chain. As such, the recent Chinese restrictions have left Western governments worried about their technological security.China claims its restrictions are retaliatory measures against US tariffs, which are at an eye-popping 145%. Analysts warn that the US has relied heavily on China for rare earth imports, with approximately 75% of these imports sourced from China between 2019 and 2022. Industry experts argue that the US and EU have overlooked the importance of rare earths, allowing China to amass a near-monopoly.Elon Musk, the CEO of Tesla, has disclosed that these export halts are hindering the development of their humanoid robots—a clear indicator of the dependence they have on these minerals from China.So, can Australia’s new reserve actually shift the balance of power? Albanese asserts that the reserve will support Australia’s industry while being available to international allies like the US and EU. While experts praise the move as necessary, they caution that Australia will still face challenges due to China’s refinery dominance. Currently, Australia mines a significant portion of global lithium but only refines a small percentage, while China refines a majority of it.Although Australia is investing in local refining with projects like Arafura Rare Earths and the newly opened Lynas processing plant, experts believe Australia may still rely on China for refinement until at least 2026. In response to the unfolding situation, China has ramped up its diplomatic efforts with Australia, blaming US strategies for market instability. However, Albanese’s focus on safeguarding Australia’s resources could deter China’s influence, yet potential vulnerabilities in refining capabilities remain.Experts conclude that while Australia's initiative may lessen dependence on China, they cannot replace it completely. The game of global trade and technology power dynamics is set to continue, with rare earths as a linchpin in this critical contest.
