CRITICAL MINERALSASPI’s Darwin Dialogue Will Seek a Way Forward for Critical Minerals
Critical minerals including rare earth elements, lithium, and cobalt, play a crucial role in industries, from electronics and renewable energy to defense. Global critical minerals markets and supply chains remain overly concentrated on China as a singular destination and source affording Chinese companies overwhelming influence over the sector across multiple extraction and processing stages and giving the Chinese government undue leverage on its neighbors and strategic competitors.
Critical minerals including rare earth elements, lithium, and cobalt, play a crucial role in industries, from electronics and renewable energy to defense.
Nearly a year has passed since ASPI hosted the inaugural critical minerals focused Darwin Dialogue, a multi-day track 1.5 initiative with support from the Northern Territory Government.
Progress has been made since, including the signing of the Australian-US critical minerals compact in May 2023, but results have not been achieved at the pace desired by governments or industry.
Immediate challenges and structural concerns persist for Australia’s critical mineral sector in 2024. Tackling these issues whilst achieving greater policy results at speed will be a crucial objective throughout the year.
Perhaps the most pressing of these challenges is the global crash in lithium value. Prices of lithium—Australia’s second largest commodity in committed capital expenditure through to 2030, surpassing even iron ore—collapsed in the last 12 months.
Consequently, Core Lithium suspended its Finniss mine operations in January. Other closures could follow if market conditions don’t improve. Operational mines and Australian lithium projects are in jeopardy.
In response, Minister for Resources Madeleine King and WA Mines Minister David Michael held crisis talks with Australian nickel and lithium producers.
The talks highlight the importance of critical minerals and the time-sensitive nature of secure supply chains. They are also a shining example of closer collaboration and communication between government and industry in the sector. Maintaining this communication, and trust, is critical to aligning policy and industry objectives, and efficiently working together to achieve Australia’s national objectives.
Similar crises are likely without sustained progress towards structural reforms.
Global critical minerals markets and supply chains remain overly concentrated on China as a singular destination and source affording Chinese companies overwhelming influence over the sector across multiple extraction and processing stages and giving the Chinese government undue leverage on its neighbors and strategic competitors.
Overly concentrated geographic clustering of the market, by itself, creates market level risks.
This risk is especially pronounced if the market participant wields its leverage coercively—which China has a demonstrated willingness to do.
In December last year, Beijing banned the export of rare earth extraction and separation technologies. Chinese companies also routinely adjust their domestic production quotas and subsidize rare earth element (REE) prices to strategically flood the market, drive out competitors, and deter new market entrants.
