China has halted rare earth exports, can Australia step up?

In the midst of rising trade tensions, Australia’s prime minister, Anthony Albanese, has pledged to invest A$ 1.2 billion ( £580 million ) in a strategic reserve for crucial minerals.

The news came after China imposed trade restrictions on seven rare earth elements, which are essential to the development of cutting-edge solutions like computers, fighter jets, and electric cars.

China’s restrictions apply to all nations, but they were commonly accepted as retribution for US President Donald Trump’s taxes.

Albanese stated that Australia had give priority to vitamins that are essential to both its safety and that of its companions, including rare earths. But had his strategy concern China’s dominance?

A group of 17 components is known as “rare” when they are extremely challenging to harvest and enhance.

Rare earths, such as samarium and terbium, are crucial to the development of cutting-edge technology that will shape the world in the upcoming years, such as electric vehicles and highly developed weapons systems.

Rare planets as well as other crucial minerals, of which Australia is a leading producer, like potassium and chrome, are included in Albanese’s proposed stockpile.

Rare universe resources exist in both China and Australia. However, China has a significant amount of control over source, making 90 % of rare earth processing, which makes them useful in technology.

And European institutions have been spooked by this.

Beijing asserted that its restrictions on unique earths were in response to Trump’s extensive taxes, which are currently 14 % on Chinese exports to the US.

However, according to analysts, Washington’s inability to stable the supply of rare earths has grown to be one of the Trump administration’s main worries, especially as Beijing’s political tensions have gotten worse.

According to the US Geological Survey, between 2019 and 2022, about 75 % of US imports of rare earths came from China.

The US and EU “dropped the game,” according to Philip Kirchlechner, chairman of Iron Ore Research in Perth, Western Australia, as China quickly gained a monopoly over elegance.

He continued,” China has its base on the body vein of the US and European defense methods.”

Elon Musk, the CEO of Tesla, claimed this week that China’s decision to stop exporting rare earths used in innovative magnets was having an impact on the company’s ability to create humanoid robots, an early example of the problems Beijing has the power to impose on US businesses.

According to Albanese’s proposal, minerals in the reserve may be accessible to both “domestic business and international partners,” with a good research to allies like the US and EU.

However, Kirchlechner continued, saying that the proposal is” never going to solve the problem,” despite praising the move as “long overdue.”

The basic problem is that China will continue to be generally in charge of the refining process of rare earths, yet if Australia stocks more crucial materials.

An excellent example of sodium is certainly a rare world, but it is a crucial metal in the production of solar panels and batteries for electric vehicles. Only a small portion of the country’s sodium is refined and exported, accounting for 33 % of it. The International Energy Agency claims that China refines 57 % of the world’s lithium while mining only 23 % of it.

As part of its Potential Made in Australia initiative, Australia has been making an investment in rare earths to use the nation’s vast mineral deposits to promote the development of a green economy.

The second mixed plant and plant for rare planets in the world was founded last year by Arafura Rare Earths, headquartered in Perth, Western Australia, with funding from A$ 840 million coming in last year. Australia’s second rare earths processing facility, owned by Lynas Rare Earths, opened in Western Australia in November.

However, the nation is anticipated to rely on China for refining until at least 2026, according to the Center for Strategic and International Studies, which has its headquarters in Washington.

China has been attempting to capitalize on Trump’s uncertainty.

China’s adviser to Canberra criticized Washington’s strategy to global trade in a number of articles in American newspapers, which Albanese swiftly rejected.

In its discussions with Trump, Australia has praised its reference sector. He imposed a 10 % tax on the importation of the majority of Australia’s items on some crucial vitamins.

However, according to analysts, Albanese’s proposal is primarily intended to shield Australia and its companions from corporate adversaries like China.

Natixis ‘ chief economist for Asia-Pacific, Alicia Garca-Herrero, told the BBC that Albanese’s plan was “more advanced” than previous ideas because it allowed for the sale of Australia’s resources in times of economic pressure.

She added that Australia might start selling more of its nutrient reserves to support lower prices on world markets and release China’s influence over setting prices.

She did point out that Australia is still unable to fully remove China.

There are areas where China could have a strong foothold, and refining is the most crucial step if Australia’s goal is to serve the West, becoming more critical to the West, particularly the US.