Australia, explained.
Australia’s rise as a critical minerals power could help reshape global trade flows (SeongJoon Cho/Bloomberg via Getty Images)
Traditional approaches won’t secure Australia’s critical minerals future – or the geopolitical heft on offer.
Subscribe to The Informer for monthly expert analysis, and to Events for advance notice of visiting world leaders and distinguished guests.
You may unsubscribe from Lowy Institute newsletters at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
Can rare earths be Australia’s next mining boom?Can rare earths be Australia’s next mining boom?
Prime Minister Anthony Albanese and US President Donald Trump have signed a critical minerals and rare earths framework, a US$8.5 billion package to accelerate a pipeline of priority projects and deliver a secure supply chain for critical minerals and rare earths required for defence and other advanced technologies. The package includes a combined $2 billion of joint US-Australia investments in different projects in Australia over the next six months.
Australia also announced up to $200 million in concessional equity in the Australia-US-Japan Alcoa-Sojitz Gallium Recovery Project in Wagerup, Western Australia, which will provide up to 10% of total global gallium supply, essential for defence and semiconductor manufacturing; and a $100 million equity investment in the Arafura Nolans project in the Northern Territory.
Australia’s rare earths moment seems to have arrived. The country is uniquely positioned to become a leading supplier as countries strive to reduce dependencies and diversify supply chains. With extensive reserves of both light and heavy rare earth elements and a world-class mining industry, it has a compelling opportunity to address vulnerabilities exposed by recent geopolitical shifts – a point clearly demonstrated this week in the Prime Minister’s first meeting with the US President in Washington.
By offering trusted, clean, transparent and secure supply chains, Australia strengthens its alliances, hedges against coercion, and asserts its role as a stabilising force in the Indo-Pacific.
But, while a good start, seizing this moment will need more than headline announcements. It will require overcoming structural challenges, empowering the private sector, and building partnerships to create a fully integrated supply chain from resource extraction to advanced manufacturing. This needs fast, determined resolve and leadership – and time is of the essence.
Australia’s credentials are significant. It has the world’s fourth-largest rare earths reserves, and is home to the only significant producer of heavy rare earths outside China, Lynas Rare Earths, which processes ore from Mt Weld in Western Australia at its Kalgoorlie facility as well as rare earths in Malaysia. Australia’s geological advantage is matched by a robust mining sector, deep regulatory expertise, a stable investment climate and growing international partnerships.
Despite these strengths, Australia faces challenges in establishing itself as a complete supply chain alternative. While it excels in extraction, it lags in midstream and downstream processing, sectors where China has dominated for decades. Facilities such as the Kalgoorlie processing plant and proposed common-user infrastructure in Western Australia are important first steps, but to truly compete, Australia must rapidly scale these capabilities.
The Lynas Rare Earths Ltd processing plant in Kalgoorlie, Western Australia (Carla Gottgens/Bloomberg via Getty Images)
On the policy front, Australia has shown readiness for bold action. The government’s A$1.2 billion critical minerals reserve, expected to be operational by late 2026, aims to boost investor confidence and counter market manipulation, particularly by state-backed enterprises. For these initiatives to succeed, incentives should focus on downstream processing and value creation, rather than solely on resource extraction. The framework must also remain open and competitive, consistent with Australia’s foreign investment regulations.
Globally, Australia’s rare earth diplomacy has been gaining momentum. In addition to the significant Australia-US framework announced today, Australia continues to expand cooperation with Japan beyond the flagship Lynas–Sojitz–JOGMEC project to minerals such as gallium, fluorite and nickel. Ties with South Korea are strengthening, as are links with India, consistent with broader Quad ambitions to secure critical technologies and reduce dependence. Taiwan, too, presents an important opportunity for joint investment in refining technologies, magnet production and integration in high-tech sectors, especially semiconductors and clean energy.
At home, Australia’s critical minerals boom offers job creation, export revenues and regional development opportunities, but needs to be managed with environmental integrity, transparency and genuine community engagement.
Geoeconomically, Australia’s rise as a critical minerals power could help reshape global trade flows. As supply chains continue to diversify, Australia stands to benefit from premium pricing, long-term contracts and deeper integration into high-tech manufacturing ecosystems. This could catalyse a new phase of industrial policy, linking mining to advanced manufacturing, defence, and clean energy innovation.
Geopolitically, Australia’s rare earths leverage enhances its strategic weight. By offering trusted, clean, transparent and secure supply chains, Australia strengthens its alliances, hedges against coercion, and asserts its role as a stabilising force in the Indo-Pacific.
Unrestricted global trade has fostered an over-reliance on the lowest-cost supplier, ultimately allowing them to dominate the market and forcing alternative sources of supply and processing to shut down. To protect national interests, governments must act decisively and swiftly, enabling the private sector and moving with determination to diversify and secure critical resources. As the Australia-US framework shows, in a world where supply chain resilience is a national security imperative, Australia’s offering of not just resources, but reliability, matters.
But the opportunity needs to be seized with urgency and ambition: traditional approaches are not enough. To build real sovereign capability, Australia needs a rapid, government-driven response that fully engages industry expertise to identify and exploit the best resources, fast-tracks planning approvals and resolves any local concerns to quickly build stockpiles, together with serious steps towards downstream industry, and deep international collaboration. Australia has all the credentials; it now needs to show leadership to fully realise its critical minerals potential.
About the author
Jenny Bloomfield
Jenny Bloomfield was a career officer with the Australian Department of Foreign Affairs and Trade (DFAT) for 29 years, and was most recently Australia’s Representative at the Australian Office in Taiwan. Her memoir, Australian Ambassador, will be published in August. jennybloomfield.com.au
The most-pressing world events explained by Lowy Institute experts and global contributors, in your inbox, every Thursday.
You may unsubscribe from The Interpreter at any time. For information on our privacy practices and how to unsubscribe, see our Privacy Policy.
