Drive three hours north of Perth, and you’ll find Eneabba, a desolate landscape that conceals a significant treasure beneath it—a million-tonne stockpile of rare earth minerals. These critical elements are vital for producing electric vehicles, wind turbines, and military equipment. In a strategic move, Australia is investing heavily, committing a billion-dollar loan to support mining operations aimed at breaking China’s stronghold on the rare earths supply chain.
China has historically leveraged its control over rare earth elements as a bargaining chip in trade disputes, notably during the trade wars under President Trump. This reliance on Chinese sources has alarmed companies worldwide, including automakers like Ford, which experienced disruptions in production due to a shortage of these essential materials. Although recent agreements have slightly eased tensions with increased rare earth exports to the U.S., there are fears of a return to supply constraints without a more stable trade arrangement.
Jacques Eksteen, an expert in extractive metallurgy, states that while rare earths are not rare in abundance, the supply chain is dominated by a limited number of countries. This control poses a significant risk to industries reliant on these materials. Historically, the rare earth industry flourished in Europe; however, in recent decades, China has ramped up its mining and processing output, now accounting for over 90% of global rare earth processing and dominating the supply for both the U.S. and the European Union.
In an effort to reclaim a share of the market, Australian company Iluka Resources is pivoting from its traditional zircon mining to focus on the extraction of rare earths that are byproducts of its existing operations. With a stockpile valued at over $650 million, Iluka is preparing to invest in processing facilities to refine these materials—an endeavor that requires significant investment and government support.
The Australian government’s loan of A$1.65 billion ($1 billion) will help Iluka establish a refinery to cater to the surging global demand for rare earths, which is expected to grow by up to 170% by 2030. The refinery is projected to take two years to become operational, but demand is already building within the auto industry, which is planning several years ahead.
Despite heightened aspirations for independence from Chinese supplies, challenges remain, notably concerning environmental implications. China's past practices in rare earth processing have led to severe pollution and health crises; therefore, Australia must ensure responsible management of its own rare earths industry. While no metal industry is entirely clean, Australia has regulatory frameworks to mitigate pollution and waste.
As countries diversify their rare earth supply chains to reduce dependence on China, Canberra views this strategic move as vital for maintaining an independent and sustainable source of critical minerals. However, building a competitive industry from the ground up will take time, and Australia is determined to position itself as a cleaner, trustworthy alternative in the global market.
