China controls about 90% of global rare earth processing and production, dominating the market for metals critical to energy transition and defence. Experts warn Australia could struggle to secure vital defence equipment without an independent supply chain amid geopolitical tensions.
To counter China’s dominance, the federal government has backed a refinery project in Eneabba, Western Australia, where over one million tonnes of rare earth mineral sands are located. Canberra has granted A$1.65 billion in loans to Iluka Resources to build the facility, expected to open in 2027 and process key elements such as neodymium, praseodymium, dysprosium and terbium. However, current reserves could only sustain output for about seven years, requiring future supplies from other miners.
China has previously forced competitors out by oversupplying and driving down prices. Industry figures say such volatility deters investment. Resources Minister Madeleine King said the government will release a “critical minerals strategic reserve” plan by the end of next year, which may include virtual or physical stockpiles, price floors, and offtake agreements to shield against market manipulation.
King stressed Australia’s potential as an alternative global supplier, particularly for advanced defence applications. Analysts caution, however, that success hinges on whether international partners are willing to pay a premium for Australian rare earths.