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

Australian Prime Minister Anthony Albanis has promised to invest $ 1.2BN (£ 580m) in a strategic reserve for important minerals, if he wins in next month’s election, trade tension increases.

The announcement occurred after China imposed export restrictions on seven rare earth elements, which are required for the production of advanced technologies – including electric vehicles, fighter jets and robots.

China’s control applies to all countries, but was widely seen as a vengeance of US President Donald Trump’s tariff.

Albanis stated that Australia would prioritize minerals that are important for its safety, and its partners, including the rare earth. But can their plan challenge China’s dominance?

The rare earth is a group of 17 elements – named “rare” because they are notorious to extract and refine.

Rare Earths like Samaryam and Terbium are important for the production of technologies prescribed to shape the world in the coming decades – including electric vehicles and highly advanced arms systems.

Albanese’s proposed reserve includes rare earth as well as other important minerals, of which Australia is a top manufacturer – such as lithium and cobalt.

Both China and Australia have a rare earth store. But 90% of rare Earth refinement – which makes them useable in technology – occurs in China, leading to significant control over the country.

And it has taken away Western governments.

Beijing stated that its restrictions on rare Earth were in response to Trump’s broad tariff on Chinese imports in the US, currently at 145%.

But analysts say that the inability to secure Washington’s rare Earth’s supply has become one of the main concerns of the Trump administration, especially deepening diplomatic tensions with Beijing.

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

Philip Kirchlechanar, director of the Iron Ore Research in Perth, Western Australia, told the BBC that the US and the European Union “dropped the ball” in recent decades, “the ball dropped” when China developed a monopoly on refinance.

“China has set its foot on the blood vein of the US and European defense systems,” he said.

Tesla CEO Elon Musk said this week said that China was stopping the rare Earth’s exports used in Advanced Magnets affecting the company’s ability to develop humanoid robots, in the early symbol of pain, Beijing has the power to provoke American companies.

Albanese’s proposal states that the minerals in the reserve will be available for both domestic industry and international partners in a possible context of allies such as the US and the European Union.

But Kirchlechner welcomed the move as a “long overdue”, saying that the proposal is “not going to solve the problem”.

The fundamental issue is that even though Australia stocks more important minerals, the rare Earth’s refining process will still be largely controlled by China.

Lithium – not a rare earth, but an important metal in the production electric vehicle battery and solar panels – a good example. Australia performs 33% of the world’s lithium, but only a small fraction sophisticated and exported. On the other hand, China, only 23% of the world’s lithium,, but according to the International Energy Agency, refines 57% of it.

Australia is investing in refining the rare earth in the Australia scheme as part of its future, which aims to take advantage of the country’s important mineral reserves to run green infection.

Arafura was rare Earth, headquarters in Perth, Western Australia, last year received $ 840m in funds to create the country’s first joint mine and refinery for rare Earth. And in November, Australia opened its first rare earth processing plant, which is also in Western Australia, which is run by Linas rare Earth.

According to the headquarters center in Washington, the country is expected to depend on China for at least 2026.

China is trying to seize the instability brought by Trump.

In a series of editorials in Australian newspapers, Canberra’s Chinese ambassador reduced Washington’s approach to global trade, and called Australia to “join hands” with Beijing – something that Albanis rejected quickly.

Australia has deferred its resource industry in their conversation with Trump. Some important minerals were exempted from 10% tariffs that they had put on the import of most Australian products.

But analysts say that Albani’s proposal is mainly aimed at protecting Australia and its colleagues from strategic opponents like China.

Alicia Garcia-Hero, the chief economist at Asia-Pacific at Natixis, told the BBC that Albani’s plan was “more sophisticated” than the previous proposals, as it included the ability to sell Australia’s resources in moments of economic stress.

If China imposes export control, he said, Australia can start more sales of its mineral reserves to help low prices on global markets, and China loosened the control over determining prices.

But he said that Australia can still not replace China completely completely.

“If (Australia’s) goal is to serve the West, then become more important for the West – especially America – there are weak places that can enter China – and the most important is sophisticated.”