~ by Alan Dupont. Originally published in The Australian on 13th June, 2025.
Australia’s world class critical minerals endowment will figure prominently in Anthony Albanese’s pitch to Donald Trump for tariff relief should they meet in person for the first time at the G7 summit of the world’s advanced economies in Canada next week.
This will be a crucial test of the Prime Minister’s ability to manage his notoriously capricious counterpart and quarantine Australia from the worst effects of Trump’s disruptive, America First approach to international trade and national security, underlined by Washington’s surprise decision to review the AUKUS defence agreement.
If Albanese wants tariff concessions and AUKUS to proceed, he needs to offer something Trump wants other than platitudes about our perennial trade deficits with the US and enduring loyalty as an ally. That may have worked in 2016 aided by golfing legend Greg Norman’s star-power. But Trump unbridled is more ruthlessly transactional in his second coming.
Offering access to our critical minerals is a smart move. They are the new oil, and Trump knows how important they are to America’s economy, tech supremacy and national security. Beijing’s export controls on critical minerals, a major concern for industries worldwide, were top of the agenda of the just concluded US-China trade talks. Trump’s relief was evident when China agreed to resume exports of suspended rare earth magnets, crucial for the automobile sector and defence. “FULL MAGNETS, AND ANY NECESSARY RARE EARTHS, WILL BE SUPPLIED, UP FRONT, BY CHINA,” Trump said in a social media post announcing his acceptance of the offer. “RELATIONSHIP IS EXCELLENT!”
To get a successful deal Albanese needs to craft a compelling narrative that captures Trump’s imagination and appeals to his business persona. This won’t be easy because the mercurial US president has already signed a critical mineral’s agreement with Ukraine, is casting covetous eyes on Greenland’s bountiful mineral resources and is being wooed by the Democratic Republic of Congo which is promising privileged access to the country’s cobalt riches in return for US investment and security assistance.
Albanese’s trump card is Australia’s ability to meet multiple US needs more quickly, reliably and cheaply than any other country because of our unsurpassed critical minerals reserves, mining expertise and historical role as a trusted security provider for the US.
The government’s decision to establish a $1.2 billion critical minerals strategic reserve by the end of next year is clearly intended to attract US investment and could prove a winner in getting buy-in from Trump. There are no guarantees that tariff relief will be part of any deal. But if Albanese can come away with a commitment from Trump to seriously invest in our critical minerals sector he will be entitled to claim a significant win.
Much has been written about the centrality of critical minerals to the global economy and energy transition. But their defence significance is poorly grasped. Without critical minerals, particularly rare earths, modern weapon systems can’t work so Trump needs to understand they are a crucial element of his country’s defence industrial base when assessing the merits of AUKUS. The strategic problem for the US is that China has a near monopoly in the processing of rare earths.
This is a war losing proposition as China has already leveraged this potentially fatal dependency by restricting US access to vital critical minerals like samarium in the escalating trade war between the two countries. Magnets made from samarium are used primarily for military purposes because of their unique ability to withstand the intense heat of electric motors in confined spaces such as the nose cones of missiles. They are also essential for smart bombs and the front-line F-35 fighter jets used by the US and Australia. Each F-35 requires 23 kilograms of samarium and Beijing controls the entire global market for the mineral. Its decision to restrict samarium has hit supply chains at a particularly vulnerable moment as Washington struggles to rebuild inventories of advanced weaponry depleted by shipments to Ukraine and Israel.
China’s dominance of the critical minerals sector from mine to finished product is unprecedented. The self-declared “people’s democratic dictatorship” produces 90 percent of the world’s magnets, controls 94 percent of the world’s rare earths production and its processing technology is now “leading, scalable, reliable and affordable” according to geologist and critical minerals expert Susie Corlett.
That’s why most of Australia’s and the world’s critical minerals production is processed in China. Perversely, this only serves to reinforce the communist state’s near monopolies rather than diversifying supply. Beijing seeks to control competitors through buyouts and board-stacking or to put them out of business by price manipulation.
Australia is uniquely placed to break China’s stranglehold. But we can’t do this without coordinated policy intervention with like-minded countries and substantial US investment. Australia simply doesn’t have the financial resources to compete with China in developing the expensive processing plants and downstream industries essential for turning mined ore into products that enable everything from electric vehicle batteries and wind-turbines to computers, smart phones, artificial intelligence, fighter aircraft and advanced radars.
What we do have is the largest critical minerals sector after China and the biggest known reserves of any nation even though 80 percent of our continent is still unexplored for critical minerals. These reserves are valued at US$597 billion, twice that of the rest of the world combined. We are the dominant producer of lithium, an essential component of EV batteries, with a projected 25 percent market share by 2030. Three quarters of Tesla’s lithium production comes from Australia. Lithium has defence applications too. It’s widely used in the manufacturing of armour, airframes and jet engines.
The US doesn’t have Australia’s critical minerals mining expertise especially the chemical engineering skills required for rare earths processing. Iron ore has three chemical stages, gold has ten but rare earths can have hundreds. Having long vacated a sector it once dominated, the only active rare earths mine in the US is at Mountain Pass in California. All the light rare earths mined there are sent to China for processing. Operator MP Materials plans to start commercial production of rare earths in Texas at the end of this year. But that won’t solve America’s China problem. Even when running at full capacity, the annual production of the Texas facility will be only the equivalent of one day of China’s production.
Another constraint is the onerous regulatory regime governing new mines. A rare earth mine in the US takes on average 29 years to open compared with 15 years in Australia. Mark Smith, chairman and chief executive of US mineral development company NioCorp Developments says: “You can spend a whole career getting a mine up and running.” Even though Trump is moving to fast-track new mines it will take decades to remedy the country’s China dependency without Australian assistance.
Albanese should highlight the unmatched defence and national security benefits for the US of a comprehensive critical mineral’s partnership with Australia. Here’s the cut-through deal – game changing American investment in our critical minerals sector in exchange for a guaranteed, long-term supply of the critical minerals needed by the US and currently provided by China.
In a detailed 2023 study on AUKUS and critical minerals for the Australian Strategic Policy Institute, Ben Halton and former Labor Defence Minister Kim Beazley write that “China dominates critical minerals supply chains and has production lines that are secure from ‘mine to battlefield’. Its enormous economic reserves of minerals such as rare earths and magnesium also support China’s dominant position. Australia is the only nation able to challenge it, and often vastly exceed it, based on proven mineral reserves.”
We are also a proven producer of heavy rare earths critical to defence. Last month, Australian company Lynas announced it was producing terbium and dysprosium from its Malaysian refinery for the first time, the only country other than China to do so. Both rare earths are essential for innovations requiring exceptional performance and durability under extreme conditions such as high-strength magnets, aerospace and defence systems. On April 4, Beijing implemented export controls on terbium and dysprosium.
Beazley argues that Australia must be “the indisputable focal point for a major new AUKUS-led critical minerals “megastructure” in support of a determined “allied effort to diversify critical minerals supply beyond China’s globe-spanning control and influence.” This won’t be achieved “without Australia spearheading the solution.”
We barely consume critical minerals whereas the US is a major consumer with few critical minerals of its own. Crucially, our economically demonstrated battery minerals reserves “exceed all other nations – far above second placed China” write Halton and Beazley. Within the “inner sanctum” of Western security, the next best placed countries with demonstrated reserves are the US (13th) and Canada (14th).
After delivering a draft, critical minerals accord to the Trump administration last month Ambassador to the US, Kevin Rudd, warned that China is seeking to entrench its dominance across 50 categories of minerals designated as critical by the US. But Australia and Canada can provide virtually all of them.
Albanese should also tell Trump that the accessibility, diversity and security of commercially proven deposits of Australian critical minerals and rare earths exceeds that of Ukraine, Greenland and the DRC.
Resources from the Ukraine critical minerals deal will take years to extract and may never materialise. It’s not clear how the joint investment fund established to oversight the deal will work in practice. While Ukraine sits on large deposits of up to 20 critical minerals there has been little detailed exploratory work to identify which are economically recoverable. ASPI Senior Fellow David Uren, a former economics editor for this masthead, writes that “Ukraine’s claims of critical minerals riches mainly rest on Soviet geological surveys done 30 to 60 years ago, not nearly recent enough to justify investment by Western financial standards.” Nearly half the minerals lie in Russian occupied Ukraine or are inaccessible because of the war.
Mineral rich Greenland is littered with shuttered projects and abandoned mining sites due to the extremely harsh weather conditions, environmental constraints, a miniscule labour force – the total population is only 56,000 – and political opposition to large scale mining. An Australian operated rare earth’s mine in southern Greenland was forced to close in 2021 when the governing Inuit Ataqatigiit party opposed it. There are currently only two active mines on the island.
The Trump administration has publicly stated it is willing to invest billions of dollars to secure access to the DRC’s vast reserves of cobalt, lithium and uranium. But this would be a high-risk venture. The country is locked in a protracted conflict with the Rwanda-backed M23 rebels who have seized swathes of its territory. China linked companies already operate 15 of the DRC’s 17 cobalt mines.
If the Prime Minister wants to fully realise our critical mineral’s potential, he needs to think beyond relief from Trump’s tariffs and ask what more we can do for ourselves.
Albanese and resources minister Madeleine King can take credit for a revised critical minerals strategy building on earlier initiatives by the Morrison government. Critical minerals is a policy area crying out for bipartisanship, but the Coalition erred in not supporting Labor’s tax credits and production incentives during the election. China massively subsidises its critical minerals sector, covering between 20-40 percent of the total project costs for critical mineral mining and processing. It also provides $57bn in cheap loans to state entities engaged in critical minerals mining and processing in the developing world.
Our struggling miners won’t be competitive without significant state support, a reality widely acknowledged within government. Hence the commitment of more than $5bn in cheap loans and other forms of financial assistance since 2022. A revised Critical Minerals List designating the priority minerals for Australia provides an important demand signal for investors.
But this is not nearly enough. Critics like Ian Satchwell, who has worked extensively on critical minerals, argue for a more holistic approach and greater global leadership in a sector where we have a strong comparative advantage although not yet a competitive one.
In a 2024 special report for ASPI, Satchwell writes that “Australia needs to broaden its critical minerals strategies and activities” by harmonising the different critical minerals lists of friends and allies; work with them to increase processing capacity outside China; help set common standards for the security and sustainability of supply chains; and assist Southeast Asian neighbours develop their sectors, thereby contributing to supply chain diversity.
Money – or lack of it – is the core problem. $5bn is a drop in the investment bucket required to transform Australia from a potential critical minerals and renewable energy superpower to a real one. Mining for critical minerals is an expensive business, refining even more so. A single new mine and processing facility costs upwards of $2bn. We need to develop a lot of them quickly. The International Energy Agency forecasts a tripling of demand for critical minerals by 2030 requiring more than 260 new lithium, cobalt, nickel and copper mines alone.
Private sector investment and partnerships will be crucial. The $4.2 trillion superannuation sector has deep pockets but has been absent from the field despite being on track to have the second-largest pool of capital in the world within the next 5-7 years. It needs to be incentivised by the government to invest in our critical minerals sector along with Europe, India, Japan, South Korea and other natural partners who have no wish to see supply chains dominated by China.
But right now, the US is the biggest player in town and the stars are in rare alignment. Our mines are shovel ready and Trump has prioritised critical minerals. Only he can command the necessary investment to really make a difference. Let’s hope there is a meeting of minds in Canada when Albanese makes his pitch.
Alan Dupont is chief executive officer of geopolitical risk consultancy The Cognoscenti Group and a non-resident fellow at the Lowy Institute.