Highlights
- China controls 100% of global rare earth refining capacity, creating a strategic vulnerability for Western democracies.
- Australia is developing a national critical minerals stockpile to counter potential supply manipulation and enhance geopolitical leverage.
- Government-backed industrial policy, including refining subsidies and strategic stockpiles, is emerging as a key defense against global market risks.
A blistering analysis aired on ABC’s The Business this week (opens in a new tab) has reignited debate over China’s weaponization of its rare earths monopoly and whether Australia’s free-market instincts are adequate to protect its own strategic interests. Chief Business Correspondent Ian Verrender laid out a stark truth: when it comes to heavy rare earths — essential for everything from fighter jets to next-gen robotics — China holds 100% of the global refining capacity.
“The U.S. Air Force couldn’t survive without them… If you want them,you have to buy them from China,” said Verrender. “Beijing has spent 30 years building this monopoly — and has never hesitated to flood markets or cut supply to crush competition.”
What’s at Stake? Military Tech, Clean Energy, and Sovereignty
Rare earths, especially heavy rare earths like dysprosium and terbium, are critical to high-performance magnets that power electric engines under extreme heat, including those in F-35s, drones, submarines, and hypersonic weapons.
Without access to non-Chinese refining capacity, Western democracies remain dangerously exposed. And according to Verrender, China knows it — and uses it.
Australian Miners Caught Between Market Logic and National Interest
Verrender warned that Australia’s flagship producer, Lynas, could see price pressure if the government mishandles its new critical minerals stockpile policy. Yet he acknowledged that “a free market approach alone leaves producers vulnerable to Chinese supply manipulation.” He cited historical examples, such as the wool reserve board and central bank currency purchases, as precedents for state-led stabilization without crowding out private industry.
“At some point,” he said, “you have to decide whether this is a national security issue.”
While Amanda Lacaze, CEO of Lynas, reportedly declined to be interviewed, other Australian miners such as Iluka Resources (opens in a new tab) and Arafura Rare Earths (opens in a new tab) welcomed government backing. Iluka is finalizing a major refining facility in Western Australia, while Arafura has received federal investment. Both companies appear to be aligned with Canberra’s emerging strategy to co-fund and co-steer strategic industries, rather than leaving them to market forces alone.
Policy Implications are Real–Stockpiling Isn’t Just Economics—It’s Geopolitics
The Albanese government’s plan to build a national stockpile of critical minerals is not just about insulating the domestic supply; it’s also about strengthening Australia’s hand in future trade negotiations, particularly with a more unpredictable United States under the Trump-Kennedy administration.
“This isn’t just about China. It’s about leverage,” Verrender said.
Rare Earth Exchanges (REEx) Commentary–Free Markets vs. Strategic Autonomy
This interview is a reality check. Letting rare earth pricing and production float on global market tides is a losing strategy when your adversary controls both the faucet and the floodgates. China has proven repeatedly that it will use rare earth dominance as a geopolitical lever.
The solution isn’t nationalizing the sector or picking favorites. But it is time for a serious industrial policy:
- Government-backed stockpiles
- Refining subsidies tied to domestic content
- Security-driven offtake agreements
- A permanent national critical minerals board with pricing and supply intelligence
The alternative REEx suggests for Australia is to remain perpetually exposed to China’s whims — or to America’s trade moods. Australia has the resources. Now it must build the backbone.
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