Australia Has Minerals and Miners, but Can It Loosen China’s Grip on Rare Earths?

Australia is joining the race to build a rare earth supply chain, aiming to challenge China’s dominance in strategic minerals.

Remote-controlled stackers and reclaimers move iron ore to railcars in Pilbara, Australia, on March 4, 2010. Amy Coopes/AFP/Getty Images

For years, Australia’s role in the global rare earths supply chain was to dig the ore and ship it to China for processing, but that is beginning to change.

As the Chinese Communist Party (CCP) tightens its grip on critical minerals called rare earths—essential for the production of technologies such as electric vehicles, wind turbines, and smartphones—securing supply in the West is becoming ever more important.

Can Australia close the gap with China, which dominates the industry? Does it have the know-how to compete? Here is what the experts say.

Can Canberra Build a Rare Earth Supply Chain?

Australia is no stranger to mining, and the country possesses some of the world’s largest deposits of critical minerals.

The country is endowed with world-class reserves of coal, iron ore, bauxite, and copper, with China its largest single customer for many of these exports.

Mining, automation, and control engineering consultant Avadh Nagaralawala told The Epoch Times by email that Australia’s rare earth opportunity sits at the “intersection of geology, geopolitics, and industrial capability.”

“Owning the minerals is one thing,” he said. “Owning the supply chain is another, and that’s Australia’s real rare earth challenge.

“Yet historically, its role has been to export raw ores and concentrates, leaving the value-added processing, separation, and manufacturing stages to other nations, predominantly China.”

Building a Critical Minerals Strategic Reserve

The Australian government is betting on a new state-backed reserve to help the country compete.

The policy shift comes amid the Trump administration’s ongoing efforts to expand support for domestic and Western rare earth businesses, a focal point in the U.S.–China trade war.

Australia holds the world’s fourth-largest rare earth element (REE) reserves, accounting for about 4 percent of global supply, according to Australia’s national science agency, the Commonwealth Scientific and Industrial Research Organisation.

In April, Australian Prime Minister Anthony Albanese’s Labor government vowed to establish a Critical Minerals Strategic Reserve to position itself as an alternative source of critical minerals.

“Australia is home to some of the largest critical minerals deposits on earth—just about the whole periodic table of elements,“ it stated. ”We are uniquely placed to meet the needs of increasing global and domestic demand.”

Mining Down Under

REE, a group of 17 essential elements, plays a key role in powering modern technology, from electric vehicle motors to missile guidance systems.

These critical elements are found in low concentrations in minerals. They are difficult to separate from other elements, requiring specialist or even toxic extraction processes.

Although some of these elements, such as dysprosium, samarium, and praseodymium, are called “rare,” they are not in fact rare in the Earth’s crust and can be found in many places.

China alone produced 270,000 tons of rare earth minerals in 2024, a 5.9 percent increase from 255,000 tons in 2023.

In comparison, the United States domestically produced about 45,000 tons of rare earth oxides in mineral concentrates, up by 9.7 percent from 41,600 tons in 2023.

According to a U.S. Geological Survey report on rare earths, Australia produced about 13,000 tons in 2024.

Closing the Processing Gap

Turning mined ore into usable rare earth materials is the hardest step in the supply chain. China dominates this area and has banned anyone from teaching the West how to do so.

Diana Rasner, Group Lead, Materials & Chemicals and Waste & Recycling at Cleantech Group, told The Epoch Times by email that rare earths come with a ton of other metals that need to be separated out first and that doing so “economically only currently makes sense in China.”

“If Australia were to try to onshore this, you’re looking at billions of dollars of infrastructure required and having to navigate the emissions associated with it as well,“ she said. ”They work, but they’re dirty, and today’s demand owners are shifting towards this being a big criterion to evaluate in sourcing.”

Facilities such as the Lynas Rare Earths plant in Kalgoorlie, Australia, and new developments in Western Australia are supporting the country’s overall processing, but its capacity remains small compared with China’s production capacity.

“Building a competitive scale will require not just infrastructure, but a trained technical workforce, long-term investment certainty, and solutions for the high costs and environmental footprint of refining,” Nagaralawala said.

Beijing’s Economic Playbook

China’s dominance of the supply chain was achieved through a state-driven, non-market economy, according to experts.

Under the CCP, China has a near monopoly on the global rare earths market, dominating both the mining and processing of these elements through state-controlled companies and strict export regulations.

China accounts for nearly 90 percent of global refined output and has designated rare earths as protected and strategic minerals since 1990.

The regime consolidated its control over the industry through decades of state investment, export controls, cheap labor, and low environmental standards, according to the Oxford Institute for Energy Studies.

Nagaralawala said Australia operates within an open market economy but that the reality is that REEs are “strategic commodities.”

“Competing with China, where the state actively coordinates production quotas, pricing, and downstream integration, may require elements of industrial policy more akin to a strategic reserve model than pure market liberalism,” he said.

He said the proposed Critical Minerals Strategic Reserve is “a recognition that specific sectors need deliberate state-backed acceleration to ensure security of supply chains.”

A Human Know-How Problem

In the West, skills are scarce.

Jack Lifton, cofounder of Technology Metals Research, told The Epoch Times that “experience” and “institutional memory” are missing from efforts to scale up Western rare earth magnet production.

Rare earth magnets are high-strength permanent magnets made from alloys of rare earth elements, and are widely used in electric vehicles.

“We have 10 companies saying they’re going to make magnets, but there’s only five guys that know how to do it,” he said.

According to Lifton, China not only guards its magnet-making technology, but also tightly controls the movement of skilled engineers.

He said that if a Chinese engineer were to say, “I’m going to go to Texas for vacation,” the CCP would say: “You don’t have a passport anymore. You’re not going anywhere.”

“They’ve prohibited levels of traveling,” Lifton said. “They’ve prohibited exportable technology.”

He said Japan is a “special case,” as it has been making rare earth magnets for its own car industry for a long time.

“They still do it, but they do it for themselves,” he said, noting that the Japanese are not “exactly eager to export these technologies.”

Lifton said he foresees a future in which sourcing is mixed, with Australian supply going to the U.S. military and European manufacturers building their own supply chains.

State Cash

Canberra is pumping money into critical minerals projects such as smelters, and is even considering a price floor in a bid to shore up supply chains for itself and its allies.

In July, the government said it was providing AU$135 million (US$90 million) in financial support for two smelters owned by minerals and metals producer Nyrstar as part of its strategy to become a key supplier of critical minerals to Western allies.

Earlier in 2025, Nyrstar said some of its assets, including its Hobart Zinc Operations, were struggling because of “worsening conditions in raw material markets, negative treatment charges, and increased costs.”

The new government support means that Nyrstar is now assessing the potential to produce antimony, bismuth, germanium, and indium at its smelters in Port Pirie, Australia, and Hobart, Australia.

“Antimony is an alloy hardener for other metals in ammunition and batteries, and is critical to the manufacture of semiconductors found in electronics and defence applications, and is used in flame-retardant materials,” the company stated.

Australian Minister for Resources Madeleine King said at a media doorstop on Aug. 5 that the government is also considering setting a price floor to support critical minerals projects, including rare earths projects.

Australia and China Are Strategically Connected

Although Australia has ambition, in reality it is economically linked with communist China.

China is Australia’s largest two-way trading partner, accounting for 26 percent of its goods and services trade from 2023 to 2024, a reliance that carries clear strategic risks.

According to the Cheung Kong Graduate School of Business, major Chinese firms, including Baowu Steel, Tianqi Lithium, Sinosteel, and PetroChina, among others, have a “significant presence” in Australia’s mining sector.

Rasner said China is not immune to the “outside influence of the world putting pressure on [it].”

“We’re watching in real time what happens when one person or group decides to impose an overarching rule,“ she said. ”Markets become more volatile, fear sets in, and then plans become reactive instead of proactive.

“If there is any good news coming out of this globally, innovations have a rare opportunity to really come to life and help boost production long term that can help nullify a lot of future volatility later down the road.”

Wesley Brown contributed to this report.