Amid the increasing strategic importance of rare earth resources, the global competition for control over the rare earth industry is becoming more intense. Recently, the United States and its ally Australia have joined forces once again to thwart China’s attempts to monopolize this critical resource sector globally.
In the battle for the global rare earth market, Australia has become a key player in countering the monopoly held by the Chinese authorities. According to a report by The Washington Post on Tuesday, the Australian company Northern Minerals, which specializes in the extraction and refining of rare heavy metal elements, has recently become a focal point in the geopolitical struggle between the United States and China. In early June, the Australian government ordered several Chinese investors to reduce their holdings in the company within a specified period.
The company produces essential materials for manufacturing electric vehicles, wind turbines, as well as military weapons like fighter jets and missiles.
China has long dominated the global rare earth supply chain, raising concerns among Western countries, especially the United States and its ally Australia. These countries are restructuring their supply chains to reduce dependence on China.
According to data from the U.S. Geological Survey, China produced 240,000 tons of rare earths last year, more than five times that of the second-largest producer, the United States.
In 2022, the Australian government announced a major investment plan for Northern Minerals aimed at constructing the world’s first rare earth refining plant outside China. This project received $800 million in government loan support, with a total value of $1.1 billion, and is set to be completed by 2026. This move signifies a significant step taken by Australia and its allies in combating China’s rare earth monopoly.
Northern Minerals from Australia is poised to become a major supplier, second only to China, holding a 20% market share.
The CEO of the West Australian rare earth refining plant Iluka Resources, Tom O’Leary, as quoted by The Washington Post, stated that this project will allow Western countries to access rare earth resources without being subject to China’s supply pressure. He emphasized that “Western governments are well aware of the risks of being entirely dependent on China for rare earth resources.”
However, China is not giving up easily on infiltrating the Australian rare earth industry. Northern Minerals was embroiled in a fierce boardroom battle with Chinese investors. The company suspected that one of its largest shareholders, the Chinese Yuxiao Fund, was attempting to secretly increase its stake through agents and seize board seats.
Northern Minerals requested an investigation into the suspicious activities of Chinese investors by the Australian Foreign Investment Review Board (FIRB). In June this year, based on the FIRB’s investigation results and citing national interest, Finance Minister Jim Chalmers ordered the Yuxiao Fund and its four related agents to reduce their purchased 80 million shares of Northern Minerals within 60 days.
Ian Satchwell, a senior research fellow at the Australian Strategic Policy Institute, pointed out that if Chinese capital successfully enters Northern Minerals’ board, it could disrupt the company’s strategic plans and even affect its operations in the global rare earth market.
To further reduce dependence on Chinese rare earths, the United States and Australia are collaborating to restructure the global supply chain.
The U.S. Department of Defense has provided $258 million in funding to the Australian rare earth company Lynas Rare Earths for its processing facility in Texas, aiming to enhance cooperation between the two countries and break China’s monopoly. These facilities will enable the U.S. to obtain critical materials for manufacturing military equipment and new energy technologies without facing restrictions from China.
Amanda Lacaze, the CEO of Lynas, stated that by increasing supplies from outside China, the company can address the “market imbalance.” The factory in Malaysia will begin producing rare heavy metal elements praseodymium and neodymium next year, helping the U.S. avoid being “subject to China (CCP).”