As a world that becomes ever more dependent on complex technologies, REEs have become critical. These critical minerals are essential for producing all of our smartphones, electric vehicles, wind turbines and medical equipment. The reality is that right now, China is winning the rare earth game. It is responsible for roughly 70% of mining, 90% of separation and processing, and an astounding 93% of magnet manufacturing. Such dominance should cause us to raise serious questions about global supply chains. At its core, it underscores our dangerous dependence on one country for these essential materials.
China has the world’s largest known reserves of rare earth elements. At the same time, Australia has risen to become a critical player in this industry. Australia is a top producer of critical minerals, such as lithium, magnesium, and zirconium. Indeed, the country is at the heart of all 31 minerals deemed critical. China’s production numbers are nearly mind-boggling and are set to reach about 270,000 metric tonnes in 2024. In contrast, Australia is mining only 13,000 tonnes of rare earths, according to the US Geological Survey.
China’s Unrivaled Dominance
China’s near-total control over the entire rare earth supply chain has been well-documented. China does not just mine more rare earths than the rest of the world combined, but dominates the refining and processing of these materials. As Professor John Mavrogenes from the Australian National University noted, “Not only do they have big rare earth deposits that they’re mining, but they’re going all the way through to separating the rare earths, then metallising them, then making all the products, including the most important — the magnets.”
It’s this integrated, holistic approach that provides China a key competitive edge in the global marketplace. It raises alarms about the United States’ dependency on Chinese resources. Authors further, Warren Pearce, a representative from the Australian Resources and Energy Employers Group, drove this point home. Indeed, he warned that China’s dominance is “staggering.” He stressed that the time was now for countries such as Australia to increase their rare earths processing and production capacities. This will provide tremendous benefit by reducing the risk of over-relying on China.
Even with this difficult hand that China has dealt, other nations are starting to look into developing their own rare earth deposits. Brazil, for instance, has about 21 million metric tonnes of rare earth reserves. The jury is still out on whether these countries will be able to develop their resources in a cost-competitive way.
Australia’s Emerging Role
Australia’s Critical Minerals Strategy is considered a blueprint to convert the country’s mining sector. The strategy seeks to move the U.S. away from just mining or extracting various minerals to refining and processing those materials, creating additional value here at home. This transition is necessary to create a more resilient, secure supply chain that can compete against countries like China.
Australia just recently signed that historic agreement with the United States. This agreement aims to strengthen the processing of rare earth and critical minerals. This new partnership is a huge step toward speeding up projects and lessening our reliance on Chinese processing capacity. Pearce noted that “we’ve always needed a bigger partner” in this endeavor to ensure sustainability and security in the supply chain.
The growing interest in Australian critical minerals is evident as companies seek partnerships to develop technology and infrastructure necessary for processing rare earths. Yet there are still open questions about whether it will be possible to fully realize any of these resources. As Professor Mavrogenes pointed out, “Some of them might be really good, really high grade, but are they going to be able to afford to mine them? Are they willing to make the environmental sacrifice for it?”
The Importance of Rare Earth Magnets
PMs are particularly significant because permanent rare earth magnets are essential to many high-tech industries and applications. These batteries are a key enabler for a wide variety of electronic devices and applications. As Professor Mavrogenes called them, “incredible things,” highlighting their importance in the technology ecosystem.
Meanwhile, countries such as Germany and Japan are already investing in next-generation technologies to produce such magnets. Yet they mostly decide to import cheaper alternatives from China instead. Mavrogenes noted that the entire supply of Germany and Japan can produce their own magnets. They opt not to make as many because Chinese products have greater cost advantages. This reality further highlights the imperative for new ideas and investment that grow new domestic production capacity, far away from the Gulf.
The race for dominance in rare earth materials is not merely about resource availability. It also involves developing intellectual property and technologies associated with processing and manufacturing. Pearce remarked that “they’ve been really effective in developing that IP and technology and not sharing it.” Such a scenario is daunting for countries like the United States that want to build independent supply chains.
