Australia has been moving to strengthen its position in the rare earths market, amid growing demand for strategic minerals. The country’s proposal is to establish a minimum price for these essential minerals, a response to economic pressures that threaten the country’s autonomy. Australia aims to ensure the country’s visibility with local projects and differentiate itself from the competition, dominated by high prices.
Strategic pricing to boost local supply chains
Australia is considering setting a price floor to support critical minerals projects, including rare earths, Resources Minister Madeleine King said, in comments that led to a rally in share prices for Australian-listed rare earths miners. Australia has been positioning itself as an alternative source of critical minerals to dominant producer China for use in sectors such as the automotive industry and defense.
It offered on Tuesday an $87 million lifeline to Trafigura unit Nyrstar’s metals processing operations. Nyrstar is assessing the potential to produce antimony, bismuth, germanium, indium at its smelters in Port Pirie and Hobart. The support comes as prices for some metals like rare earths have been too low to fund processing capacity in Western nations, meaning that China has remained the world’s dominant supplier.
There was a strategic shift last month when the U.S. government offered a pricing floor in a landmark deal with its largest rare earths producer intended to support a viable U.S. rare earths industry. “Pricing certainty means companies and investors are less exposed to volatile markets and prices, which are opaque and prone to manipulation,” King said in a statement first reported by the Australian newspaper on Monday evening.
Investors react to policy shifts
This project is an Australian initiative to ensure the continuity of strategic projects, even with the international scenario of low prices. The government intends to act as an institutional buyer and enter into long-term contracts at minimum prices, thus reducing financial risks for smaller companies.
Australia aims to provide price certainty for emerging critical minerals projects through its role as a buyer, after it pledged A$1.2 billion ($775.08 million) to build a strategic critical mineral reserve earlier this year. The agreements will focus on critical minerals with demonstrated end-uses in defense and strategic technologies and minerals where Australia is especially well-placed to provide supply amidst supply chain issues, particularly heavy rare earths.
Rare earths are a group of 17 elements. They include a subset of heavy rare earths, such as terbium and dysprosium, which are categorized by their higher atomic weight, are less plentiful and command higher prices than others.
Market reactions highlight growing interest in domestic rare earth projects
Shares in Australian producer Lynas Rare Earths LYC.AX, which started producing heavy rare earths earlier this year, rallied more than 6% to the highest in 13 years. Shares of Iluka Resources ILU.AX and Arafura Rare Earths ARU.AX were both up close to 10% on Tuesday.
U.S. rare earths producer MP Materials MP.N last month unveiled a multi-billion dollar deal with the U.S. government to boost output of rare earth magnets and help loosen China’s grip on the materials used to build weapons, electric vehicles and many electronics.
Global realignments in critical minerals
Supply security of critical minerals has become a major strategic priority for Western countries. Australia’s appreciation of these minerals reflects the sector’s optimism and the idea that this can reposition the country as a key player in the high-tech supply chain.
The Australian proposal is a calculated move to ensure competitiveness and sovereignty in a sector vital to the technological and industrial future. Following the example of the United States, the country reinforces its long-term strategy of becoming a key supplier to markets seeking sustainable, safe, and affordable alternatives. The coming months will be decisive in assessing the effectiveness of this policy and its real impact on the global supply balance.
GCN.com/Reuters