Rare-Earth Processing Must Be a Strategic Priority for Australia

Rare earths are not necessarily rare, but they are considered to exist in concentrations too low to be mined economically. Beazley says vast amounts are already being mined in Australia, but processing here is limited so far. To ensure supply to the defense and environmental industries that depend on these minerals, the mined material must be processed. That’s a strategic imperative, he says.

Beazley says Beijing is well aware that Australia is the world’s only major producer of rare earths independent of the Chinese Communist Party–controlled supply chain. ‘Beijing has made offers for Western Australian mineral businesses well above market value to try to maintain its monopoly, and add to its arsenal of possible choke holds on increasingly vulnerable nations. Western Australia is perhaps ground zero in an apparent critical minerals war lying ever so eerily under the gaze of the public eye.’

China dominates world supplies of rare earths and long ago recognized their strategic significance. Former Chinese leader Den Xiaoping observed in 1992 that while the Middle East had oil, ‘China has rare earths’.

In 2006, China limited its rare-earth exports to ensure it had enough of the materials for its own needs.

In 2010, in a taste of what could come, China stopped rare-earth exports to Japan during a territorial dispute. That provided the world’s industrialized nations with an overdue wake-up call on just how dependent on Chinese production they had become. The global need to diversify provides Australia with a great opportunity, says Beazley.

It’s extraordinary, he says, that vital parts in the F-35 joint strike fighter rely on rare-earth magnets made by a Chinese company. China’s export-control laws allow Beijing to ban exports of strategic materials to specific companies, and that could leave defense manufacturers without crucial components for badly needed weapons, says Beazley. ‘I think there’s a little bit of unreality in the US about how dependent they actually are.’

In February 2021, the US launched a major review of it supply-chain security and it’s working to rectify the situation.

Its dominance of rare-earth production and processing means China can pull industry away from many nations while selling them back manufactured products. Western defense companies would be easy targets.

Beazley believes Australia is ahead of its US ally, but establishing the processing and manufacturing capacity to lessen dependence on China will require considerable government support. That can be done in cooperation with Japan, which has the technical capacity to process rare earths, and with the US, he says.

As WA governor, Beazley made the bold statement that WA industry was about 10 years ahead of NASA in key areas of dual-use technologies. ‘Australia is integral to the effective functioning of our allies and the world economy. Look no further than WA resources that feed supply chains—whether they are rare earths, lithium, titanium, iron ore or other resources spanning virtually every identified critical mineral—not to mention world-leading innovation born out of the resources sector, including those related to remote operations and autonomous systems,’ he said.

Brendan Nicholson is executive editor of The Strategist.This article is published courtesy of the Australian Strategic Policy Institute (ASPI).