Australia forging ahead on critical minerals accords with allies

European Union delegation on a visit to Mt Weld rare earths mine. Credit: Government of Western Australia

Australia is seeing early success in attracting investment from key diplomatic allies in its nascent critical minerals industry amid a global push to reduce reliance on dominant producer China, the country’s resources minister said on Thursday.

Speaking at an event in Darwin, Madeline King said Australia is well placed to play a significant role in both the extraction and processing of mineral resources and is forging ahead with agreements to encourage investment from allies.

Australia supplies nearly half the world’s lithium, is the world’s third-largest cobalt exporter and is a significant producer of rare earths; copper; graphite; manganese and other minerals key to the global green energy transition.

The government has signed new agreements with Japan, Germany, the UK and India since late last year to encourage funding for project development, as it prepares to soon release its own national critical minerals strategy.

“The events of recent years have seen Covid-driven supply chain disruptions, energy price spikes, and geopolitical tensions spilling over into armed conflict,” King said.

Such events show that market concentration leads to unreliable supply chains, she told the event, run by think tank The Australian Strategic Policy Institute.

“China enjoys an unchallenged position across many aspects of the global critical minerals market, having invested in its sector for decades,” she said.

King said “likeminded partners” can work together to build sustainable supply chains and hedge against such concentration.

She also acknowledged “the leadership and foresight” of the US and Japan, with both countries becoming key investors in Lynas Rare Earths, which is the only major rare earths producer outside China.

Australia’s Arafura Rare Earths Ltd this week also signed a supply agreement with wind turbine maker Siemens Gamesa Renewable Energy A/S, after being granted a $600 million loan guarantee from German credit agency Euler Hermes Aktiengesellschaft in March to develop its Nolans project.

King’s comments come after the country’s treasurer said last year that Australia would become “more assertive” on who it lets invest in its critical minerals space.

Australia’s government in March blocked a Chinese investor from raising its stake in a rare earths mining company on the advice of the Foreign Investment Review Board.

(By Melanie Burton; Editing by Sharon Singleton)

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