Highlights
- Australia faces strategic challenges in critical minerals.
- Australia is caught between economic dependence on China and strategic alliances with the US.
- China currently controls over 90% of rare earth processing.
- The control limits Australia’s technological sovereignty and industrial transformation.
- Australia must accelerate domestic R&D, permitting reforms, and strategic joint ventures.
- The goal is to compete in the evolving global minerals economy.
As geopolitical competition intensifies over the global supply of critical minerals, Australia finds itself in a precarious position, courted by the United States and its allies for strategic raw materials, yet deeply entrenched in a commercial relationship with China, the dominant player in minerals processing.
A recent Bloomberg interview (opens in a new tab) with Professor Ian Satchwell (opens in a new tab) of the University of Queensland (opens in a new tab) underscores this double bind, highlighting the difficult path Australia must navigate to balance economic reliance with strategic independence.
China currently controls over 90% of rare earth processing and remains Australia’s largest customer for minerals. While Canberra has signed 27 agreements with partners like the U.S., Japan, and South Korea to diversify supply chains, Satchwell warns that these are “early days” and meaningful industrial transformation has yet to materialize. Australia’s Future Made in Australia (opens in a new tab) initiative aims to anchor more value-added processing domestically; however, this vision is complicated by global subsidy races, high domestic operating costs, and intense customer preference for onshore processing, which offers strategic and economic benefits.
Critically, Australia’s ambitions are undermined by a lack of technological sovereignty. As Satchwell points out, China not only dominates mineral processing capacity but also the underlying know-how, particularly in the separation of lithium and rare earths. Without access to equivalent technology or the capital firepower to match U.S. subsidies, Australia risks remaining a raw material exporter in a world that increasingly values end-to-end supply control.
To break this impasse, Australia must move more quickly on permitting reform, invest in domestic metallurgical research and development, and pursue strategic joint ventures—not just offtakes—with allied nations. As the global minerals order reconfigures under the weight of trade wars and energy transitions, Australia’s ability to escape the gravitational pull of China’s rare earth monopoly will determine whether it leads in the new resource economy or is left supplying it.
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