Choosing the Winners: ASPI Strategist’s Guide

In a recent announcement made in Western Australia, Prime Minister Anthony Albanese and Resources Minister Madeleine King revealed that the government is providing a loan of $475 million to mining company Iluka. This funding brings the total loan amount to $1.25 billion, specifically designated for processing heavy rare earths to refined oxides.

The decision to allocate government loans to Iluka was the result of extensive debate within the government, and similar discussions are expected to take place in the future. The key rare earth elements involved in this endeavor include neodymium, praesodymium, dysprosium, and terbium.

Tom O’Leary, Iluka’s chief executive, highlighted that the refined oxides produced will be utilized in various industries such as electric vehicles, defense applications, renewable energy, and robotics. Minister King emphasized the government’s commitment to supporting other rare earth enterprises in Australia, including Lynas in Kalgoorlie, Arafura in the Northern Territory, and Australian Strategic Materials in Dubbo. Additionally, there are ongoing projects related to graphite refining, vanadium extraction, and further rare earth mining across the country.

China’s recent focus on Australia’s critical mineral reserves, particularly gallium, germanium, and antimony, has led to significant market fluctuations. Antimony prices, for instance, have surged due to Chinese bans on supplying the United States, with prices reaching $39,000 per metric tonne in Rotterdam.

The significance of Iluka’s Eaneabba project lies in its production of rare earths essential for manufacturing permanent magnets used in various applications, including missiles. Minister King justified the government’s involvement in this emerging sector by highlighting the opaque nature of international markets for critical minerals, necessitating government participation.

Australia’s push to compete in the critical minerals market, led by Iluka’s refining processes, aims to counter China’s dominance in rare earth refining globally. By negotiating directly with buyers and diversifying sources, Australia could potentially increase prices above current market rates and establish itself as a competitive player in the industry.

Overall, Australia’s abundant mineral reserves, strong mining expertise, and research institutions like the Australian Nuclear Science and Technology Organisation and Commonwealth Scientific and Industrial Research Organisation position the country favorably in the global market. Continued strategic commitment, exploration efforts, and fostering international partnerships are crucial to solidifying Australia’s position in the critical minerals sector. The government loan to Iluka represents a step towards achieving these goals and enhancing Australia’s role in the global supply chain of rare earth elements.