Rare earth elements like Neodymium, Praseodymium, Dysprosium, and Terbium play a crucial role in modern technology. They are essential for manufacturing electric vehicles, wind turbines, fighter jets, and nuclear submarines. As Prime Minister Anthony Albanese prepares to meet with U.S. President Donald Trump, the issue of rare earth supply is expected to be a key topic.

China currently dominates the global market for rare earth production and processing, controlling about 90% of the processing capacity. This dominance has raised concerns among countries like Australia, according to Naoise McDonagh, an expert in international trade and geopolitics. He stated, "If we do not have an independent supply chain for rare earths, Australia may not be able to access the defense equipment it needs in an incredibly volatile period. There is an absolute security imperative here that cannot be weighed purely against profit."

Despite their name, rare earth elements are not particularly rare in the Earth's crust. The challenge lies in the extraction and refining processes, which can be costly and environmentally taxing. China's influence on the market became evident in 2010 when it suspended rare earth exports to Japan amid a territorial dispute. This prompted Japan to invest in Australian miner Lynas Rare Earths, which is now the only significant producer of separated rare earth materials outside of China.

Lynas has been working to establish a more independent supply chain. However, the company still faces challenges due to China's market manipulation tactics. McDonagh noted, "If a new miner or investor wants to set up a rare earth refining capacity, China has been known to flood the market with a lot of supply; this forces down prices and undermines the operations investments of the new non-China supply."

In Australia, a significant stockpile of mineral sands containing rare earth elements is located in Eneabba, about two hours north of Perth. This stockpile, built by Iluka Resources since the 1990s, is valued at around $1 billion and is intended for a new refinery under construction at the site. The refinery is expected to be completed in 2027, supported by a $1.65 billion loan from the federal government. Daniel McGrath, head of rare earths at Iluka, explained, "What the rare earth refinery will do is take rare earth mineral concentrates, extract those rare earths, and separate them into their discrete individual form."

The refinery will only supply the stockpile for about seven years. Iluka aims to collaborate with other rare earth miners to create a more robust supply chain. McGrath stated, "Our intention is to supply like-minded western markets that are building that downstream supply chain to address the monopoly that is currently held by China."

However, experts warn that the refinery alone will not be sufficient to revitalize Australia's rare earth mining industry. Wyloo Metals CEO Luca Giacovazzi highlighted the need for further investment and stable market conditions to advance projects like the Yangibana rare earths project in Western Australia. He suggested that the Australian government could help by establishing a floor price for specific rare earth metals, similar to measures taken by the U.S. government.

Resources Minister Madeleine King indicated that a floor price might be included in the federal government's Critical Minerals Strategic Reserve plan, which is expected to be finalized by the end of next year. She stated, "The notion around the Critical Minerals Strategic Reserve is to introduce mechanisms that bring stability to the market of rare earths and critical minerals."

King emphasized the importance of developing offtake agreements to stabilize the market. She expressed hope that Australia could become a leading alternative supplier of refined rare earths, particularly for advanced defense applications. "These minerals and metals go into all matter of things. But importantly, they also go into a number of very advanced defense applications," she said.

While government investment is seen as necessary, McDonagh cautioned that it carries risks. He noted, "We don't know if the investment is going to be successful. Australia is solving the supply side. We have to now get our partners on board to help solve the demand side."

The future of rare earth production in Australia hinges on collaboration with international partners willing to pay a premium for Australian-produced rare earths.