Around the world, Australian rare earth miners are striking major business deals: in the US, Lynas Corporation has won funding to build a processing plant in Texas; Hastings Technology Metals has reached an agreement with German conglomerate Thyssenkrupp for the supply of high-grade rare earths; and Australian Strategic Materials (ASM) has successfully tested its rare earth powders for KIRAM in South Korea; to name but a few. So what, asks Gabriele Richter, is going on?
Rare earth elements are a collection of 17 soft heavy metals that are indispensable to a growing array of advanced technologies ranging from smartphones to electric vehicles (EVs) to military weapon systems. Despite their name, rare earths are relatively widespread in the Earth’s crust. Their “rarity” is due to their low concentrations, which makes them difficult to extract.
China contains approximately 35% of the rare earth deposits in the world, but over 95% of the world’s production. In 1992, China’s then-leader Deng Xiaoping remarked: “The Middle East has oil, China has rare earth” Because China prioritises not just extraction, but separating and processing into usable elements, its monopoly is forecast to last for a few more years. Exercising this much control puts it in powerful position.
The Chinese monopoly is why manufacturers globally are actively seeking non-Chinese supply. As noted by Ursula von der Leyen, EU President of the European Commission: “Green and digital technologies currently depend on a number of scarce raw materials. We import lithium for electric cars, platinum to produce clean hydrogen, silicon metal for solar panels. 98% of the rare earth elements we need come from a single supplier – China – and this is not sustainable.”
Building a single F-35A fighter jet, for example, requires at least 420 kg of rare earths, which come primarily from China (indeed, there are reports that China is considering using rare earth export restrictions to undermine the US defence industry). China’s Northern Rare Earths, the world’s leading supplier, is expected to double production within three years as smaller Chinese producers also accelerate.
China took over the title of largest producer from the US in the 1990s. It was noted by MetalMiner’s Stuart Burns that: “The US sends its ores to China for refining. That’s not because it doesn’t have the technical know-how; the US simply lacks the facilities.”
Rare earths, tungsten and lithium were among 35 minerals deemed “essential” to US economic and national security by the Trump administration, and the new Biden presidency has continued this focus on removing China from the country’s manufacturing supply chains – signing agreements with Australia and Canada in 2018 and 2020 respectively to secure the supply of rare earths. Additionally the US recently provided $US60m in funding for Australian rare earths miner Lynas to build a plant in Texas. Lynas has positioned itself to become the Western world’s largest supplier of rare earths to the US military. The US funding is a sign of how anxious the US and other Western nations are to break China’s dominance.
Lynas is the only rare earth producer outside China, and it has overcome significant challenges to establish itself in this way. It sends rare earth concentrates from its mine site in Western Australia to Malaysia for processing into saleable rare earth oxide products. But this has not been without disruption, amid the Malaysian government’s concerns about the low-level radioactive waste generated.
Meanwhile, Germany’s Thyssenkrupp Materials Trading has signed a binding off-take agreement with WA-based Hastings Technology Metals for the supply of high-grade mixed rare earth carbonate, in a big boost to Hastings’ hopes of starting its proposed $449m Yangibana Rare Earths Project in WA. The timing coincides with a strong increase in demand for rare earths driven by the EV revolution.
Grasping the opportunity for Australia
Merely possessing deposits of rare earths is no guarantee of being able to exploit them. The mining and extraction processes are capital-intensive, consume large amounts of energy, and release toxic by-products. Large amounts of capital will be needed to set up facilities to compete with, and supply to, the world.
It is for this reason that Prime Minister Scott Morrison mentioned critical minerals during his address to the National Press Club on 1 February, as part of $1.5bn in new funding for the Federal Government’s Modern Manufacturing Strategy. In March, the Resources Technology and Critical Minerals Processing National Manufacturing Priority road map was made available to create more processing capacity. This roadmap aims to strengthen Australia in becoming a global centre for commercialising and manufacturing resources technologies and establishing a critical minerals processing industry.
The moves are part of a broader push to make Australia one of the developed world’s vital suppliers of rare earths.
This is a growth opportunity for Australia, with its abundant untapped domestic deposits, existing infrastructure, stable regulatory framework, and globally recognised expertise in developing and operating complex mines. To state some examples: WA’s Iluka Resources is negotiating with overseas governments seeking non-Chinese supply as it plans to become the only fully integrated supplier in Australia. And Australian producer ASM – building its first processing plant – recently strengthened its supply chain by closing a deal with two regional governments in South Korea , in what was considered a snub to China.
Australian companies such as Lynas and Iluka are already shipping many resources offshore – including to the US, which is rapidly developing its own capacity with Australian support. But the Federal Government is now eager to drive what many in the industry have been demanding for decades: to add more value to the materials mined in Australia.
The next wave towards high-tech manufacturing increasingly involves rare earths. Australia is positioning itself not to miss the opportunity.