Highlights

• China dominates global rare earth element production and refining, posing strategic challenges for U.S. technology and defense sectors.
• Australia is investing A$1.2 billion in critical minerals and developing new rare earth mines and refineries to support international allies.
• Despite promising developments, Australia cannot immediately replace China's rare earth processing capabilities.

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In a detailed feature published May 1st in Forbes (opens in a new tab), energy analyst and transition scholar Dr. Ian Dexter Palmer offers a compelling, if cautiously optimistic, account of Australia’s potential to bolster U.S. access to rare earth elements (REEs) amid deepening trade conflict with China. As Beijing enforces an export ban on heavy rare earths—vital inputs for defense systems, EV motors, semiconductors, and AI hardware—Palmer probes whether Canberra can fill the breach.

Australia, already a global leader in renewable energy innovation, is scaling rare earth production through strategic investments in mining and refining. Notably,

Arafura Rare Earths and Lynas Rare Earths are expanding integrated operations in Western Australia, while Iluka Resources is constructing the world’s only non-Chinese heavy REE refinery using legacy mineral sands tailings. Australian Prime Minister Anthony Albanese has pledged A$1.2 billion to establish a strategic reserve for critical minerals, explicitly citing the need for security cooperation with allies such as the U.S.

Yet, despite these moves, Palmer candidly admits that Australia cannot immediately replace China’s dominant processing capacity, which still accounts for 92% of global rare earth element (REE) refining. Although promising, most Australian facilities will not be fully operational until 2026, and China’s cost, scale, and technical advantage in separation chemistry remain formidable.

Key Takeaways from Palmer’s Article in Forbes:

• China’s Dominance: China mines 61% and refines 92% of the global rare earth elements (REEs). It's April 2025 export ban on seven heavy REEs targets the U.S. defense and semiconductor sectors.
• U.S. Vulnerability: The U.S. has only one rare earth element (REE) mine (Mountain Pass) and no domestic processing, highlighting years of policy neglect. Trump’s recent executive order aims to reshore the supply chain.
• Australia’s Role: A$1.2 billion in critical mineral investments, new mines (Arafura), and refineries (Iluka, Lynas) may eventually insulate allies from Chinese leverage.
• Strategic Gaps: Despite progress, Australia is unlikely to supplant China in the short term. Processing chokepoints, particularly for heavy rare earth elements (REEs) like dysprosium and terbium, remain unresolved.

Unaddressed Questions and Gaps

While Palmer delivers a well-researched assessment, his article stops short of addressing several pressing issues:

• How will Australia prioritize U.S. demand if China retaliates or outbids buyers?
• What mechanisms exist to coordinate REE reserves across allies—such as a U.S.–Australia–Japan stockpile alliance?
• Is Australia prepared to invest in midstream magnet manufacturing, or will raw REEs still be exported to China for value-added processing?

REEx POV

Australia is a key ally, and its investments in rare earths are vital. But without coordinated international planning, midstream buildout, and enforceable trade frameworks, optimism may outpace reality. The U.S. must urgently invest in refining, magnet production, and circular economy solutions like e-waste recycling if it hopes to regain REE sovereignty.

For full analysis, see Dr. Ian Dexter Palmer’s article in Forbes: “A World Leader In Renewables, Can Australia Save U.S. Rare Earths” (May 1, 2025).