By Anthony Fensom
Australian miners are taking on the challenge of ending China’s near monopoly on rare earths supply amid intensifying geopolitical competition over critical minerals. With Beijing’s latest moves rattling the global automotive and manufacturing sectors, can the West mount a serious response?
‘The whole car industry is in full panic,’ Frank Eckard, Chief Executive of German magnet maker Magnosphere, told Reuters in a 9 June report. ‘They are willing to pay any price.’
Eckard said he had been flooded with calls from automakers and parts suppliers seeking alternative sources of magnets, currently in short supply due to China’s export curbs.
Automakers in Europe, Asia and the United States have been forced to cut output due to the lack of the magnets, which are essential for everything from cars and drones, to robots and missiles.
This followed China’s April 2025 move to add further export controls on rare earth metals such as dysprosium, scandium, terbium and yttrium-related items, measures it described as ‘non-discriminatory’.
China currently controls up to 70 per cent of global rare earths mining, 85 per cent of refining capacity, and 90 per cent of rare earths metal alloy and magnet production, according to consultancy AlixPartners.
China’s rare earths magnet exports dropped 74 per cent to 1238 tonnes in the year to May 2025 – the lowest level since February 2020 – with a fall of nearly 53 per cent compared to the previous month, according to The Wall Street Journal.
On 11 May, US and Chinese officials reached a 90-day deal on tariff hikes, which was followed by a 11 June trade framework that included Beijing’s commitment to resuming exports of rare earth elements and magnets to the United States.
Yet the bilateral agreement has left non-US companies scrambling to secure supplies, while Washington still aims to ensure it has its own ex-China rare earths supply chain no later than 2027.
Independence Day
The United States currently obtains 70 per cent of its rare earths imports from China, an over-reliance that sparked US President Donald Trump’s January 2025 executive order for the United States to become ‘the leading producer and processor of non-fuel minerals, including rare earth minerals’.
‘The United States is demanding “Independence Day” in rare earths supply, without which both its economy and defence industry are critically exposed,’ says Brett Lynch, Executive Chairman of Ionic Rare Earths.
‘Solving this issue will require both time and investment; however, we are working with US partners to provide a near-term solution that alleviates current supply uncertainties.’
The Melbourne-based company is eyeing building multiple magnet recycling plants across the United States, based on rare earths separation technology developed by its Belfast-based subsidiary, Ionic Technologies. A US-based rare earths refinery is also being mapped out, working with its Brazilian partner, Viridis Mining and Minerals, through its Viridion joint venture.
‘Ionic has been working through talks with a number of US parties on building supply chain resilience and we believe our patented magnet recycling technology delivering separated magnet rare earth oxides (REOs) could be part of the solution,’ says Ionic Rare Earths Managing Director Tim Harrison.
‘A scoping study has also shown the potential for a dedicated US-based refining facility, potentially located within Tennessee, producing separated magnet REOs and heavy REOs, including those on China’s latest export restrictions.’
Government support
Ionic Rare Earths is seeking UK Government funding for its plans to build a commercial magnet recycling plant in Belfast, Northern Ireland, which could serve as a model for the company’s other potential plants in Brazil, the United States, Asia and elsewhere.
The Brazilian Government is also boosting the sector via its US$1.4-billion ‘transforming strategic minerals’ initiative, with Viridion selected as a beneficiary of ‘significant’ funding to progress its downstream rare earths refining and recycling facilities.
The Australian Government is also stepping up support for the sector, with the Albanese Government announcing plans to establish a ‘Critical Minerals Strategic Reserve’ on 24 April, including via national offtake agreements and selective stockpiling. An initial investment of $1.2 billion in the reserve is planned, with a total investment of $5 billion including the existing Critical Minerals Facility.
Federal Resources Minister Madeleine King said at a resources conference on 21 May that any stockpiles would be ‘small and temporary’, with participation in offtake agreements ‘voluntary – there will be no obligations on industry’.
The minister said a taskforce would be established to finalise the reserve’s design and its functions, with the government focused on ensuring that Australia ‘will lead on critical minerals and rare earths globally.’
The federal government has supported Arafura Rare Earths’ Nolans rare earths project with more than $1 billion worth of grants and loans, while Iluka Resources’ Eneabba rare earths refinery has received around $1.6 billion. Lynas Rare Earths has also received $22 million in Australian Government funding, with more assistance from the United States and Japan.
In the United States, the Trump administration reportedly plans to support rare earths projects via the Defense Production Act, with Nevada-based MP Materials expected to be a major beneficiary. The existing US stockpile of rare earths is ‘massively insufficient’, US Interior Secretary and National Energy Dominance Council Chairman Doug Burgum told Bloomberg in a 1 June interview.
In Europe, the European Commission announced in February 2025 its ‘Clean Industrial Deal’, including the creation of a ‘European Union critical raw material centre to jointly purchase raw materials’, adding to plans to diversify supply chains.
Can Australia’s rare earths miners end China’s stranglehold on the market?
While Lynas’s Kalgoorlie processing facility is currently the nation’s only rare earths refinery, Australia’s growing pipeline of projects could double critical mineral exports by the end of the decade, according to the Office of the Chief Economist’s March 2025 ‘Resources and energy quarterly’.
The value of production in Australia’s rare earths pipeline is estimated at $1.9 billion by fiscal 2030, in addition to $1.3 billion in exports, the report says.
‘Combining Australian mining know-how with support from governments and international partners will be crucial in developing an ex-China, secure and sustainable rare earths supply chain,’ Ionic’s Lynch says.
‘The race is on and it’s now or never if the West truly wants guaranteed supply of these key minerals for the 21st century.’
