Highlights
- China dominates rare earth processing, forcing Australia and US allies to collaborate on alternative mineral supply chains.
- Strategic public investments and government funding are critical to establishing competitive critical minerals infrastructure.
- Rare earths have become a geopolitical litmus test, with Australia's success depending on rapid alliance-based development.
In a commentary published by the Australian Financial Review, Hayley Channer, Director of the Economic Security Program at the United States Studies Centre, argues that rare earths and critical minerals are emerging as the defining test of the Australia-US alliance. (Source: Hayley Channer, AFR, Sept. 9, 2025).
The Context
Channer notes that “the race with China is already over” when it comes to mineral processing. China maintains decades of experience, cheap energy and labor, and the ability to bring new mines online rapidly. Instead, Australia’s competition lies with other mineral-rich democracies — Vietnam, Indonesia, Canada, the U.S., and Europe — all racing to capture a finite, non-Chinese share of global processing capacity. This is a point of view Rare Earth Exchanges (REEx) has shared. Taking on China necessitates a collective, multinational approach.
The U.S. Trigger
The turning point came earlier this year when China withheld rare earths and magnets in response to the Trump administration's tariffs. U.S. manufacturers, including defense contractors, were forced to pause or slow production. Washington quickly reversed some chip export bans, China eased its embargo, and the U.S. pivoted to direct equity investments. The most dramatic: a $550 million Defense Department injection into MP Materials, coupled with offtake guarantees and a floor price. That move boosted industry confidence and rippled into Australian share prices.
Implications for Australia
Australia has already deployed billions in public funds, including a $1.65 billion non-recourse loan to Iluka and a $50 million equity stake in Liontown Resources. A strategic mineral reserve is being designed, with heavy rare earths and the “three Gs” — gallium, germanium, and graphite — likely to be stockpiled. Channer warns that Australia must act “at pace” or risk being left without a “seat when the music stops” in CSIRO’s words.
Investor Questions That Remain
For retail investors, key uncertainties include:
- Sustainability: How long can public equity and loan packages underpin projects before private capital steps in?
- Scope: Will funding be limited to a handful of minerals, or broaden across the 35–50 identified as “critical” in Australia and the U.S.?
- Alliance leverage: Will Australia secure preferential offtake into U.S. and allied defense-industrial bases, or find itself competing with fellow democracies for limited downstream seats?
Timing: With rivals moving fast, can Canberra compress permitting and financing timelines to keep pace?
The analysis underscores that rare earths are no longer just an industrial story; they are a geopolitical litmus test. For investors, Australia’s ability to balance speed, scale, and alliance politics will determine whether it thrives in the ex-China supply chain.
Source: Hayley Channer, Australian Financial Review (via United States Studies Centre), Sept. 9, 2025.
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Hayley Channer and REEEX still haven’t grasped the issue at its core.
The self-interested economic nationalism of the Trump administration is potentially little better than China’s creation of a REE monopoly. If they stand up a US-only REE chain first and foremost to meet domestic demand – which Trump would energetically champion – where does this leave Australia, South Korea, Japan, Europe, UK, Canada and so on?
We remain mendicant states, picking crumbs from the feet of superpowers. Middle powers will continue to rely on the kindness of strangers.
This is why the Eneabba refinery is so so important – moving from a monopoly to a duopoly is insufficient protection