Rare earths—the 17 metallic elements pivotal to magnets, batteries, catalysts, and electronics—are quietly reshaping strategic supply chains. Australia’s ambitious campaign to erode China’s dominance in this domain is not just a regional development. It is a signal that the global rare earths market is poised for a significant transformation.

Why Rare Earths Matter

Rare earth elements (REEs) underpin technologies embedded in modern life:

Electric Vehicles (EVs) rely on neodymium‑iron‑boron magnets for compact, high‑power motors. China refines nearly 90% of rare earths—even though it controls around 60% of production (ft.com).

Renewable energy systems, particularly wind turbines, depend on high‑performance magnets made from dysprosium and terbium (theaustralian.com.au).

Consumer electronics, medical devices, lasers, and advanced manufacturing technologies integrate rare‑earth magnets, phosphors, or catalysts (china-briefing.com).

Defence systems, including missile guidance and precision instruments, rely on rare earths whose magnetic and conductive properties are difficult to replace.

A single supplier nation—China—controls most of this critical supply chain. That means geopolitical decisions and regulatory shifts can ripple outward into the global economy with little warning.

Australia’s Strategic Bid

Australia is mounting a coordinated effort to establish a full domestic rare earths ecosystem—from mining to processing to refining.

The Nolans Project, led by Arafura Rare Earths in the Northern Territory, is positioned to become the country’s first integrated mine and refinery. The Australian government may invest up to US$1.2 billion through a combination of equity, debt, and strategic partnerships (youtube.com).

Lynas Rare Earths operates the high‑grade Mount Weld mine in Western Australia and the largest rare‑earth processing plant outside China, located in Malaysia. Its facility now produces dysprosium, marking the first such output beyond Chinese borders (news.com.au).

Iluka Resources is developing a refinery for heavy rare earths in Eneabba, with A$1.6 billion in government support. Production is targeted to begin by 2027 (ft.com).

Global Context

China’s recent export restrictions on key rare earth elements and magnet materials have created measurable supply uncertainty. Global manufacturers across the automotive, robotics, and renewable energy sectors are already experiencing the effects (ft.com). Stock prices of Australian producers have risen in parallel, as investors weigh the rising value of diversified sources.

Australia’s efforts are not just market-based—they align with broader policy strategies seen in allied nations. Australia is pitching itself as the long-term alternative in the rare earth supply chain, with the National Reconstruction Fund and onshore refining support initiatives behind it (theaustralian.com.au).

Implications for Global Markets and Consumers

The rare earths market is increasingly central to both industrial strategy and consumer pricing. As access to these materials becomes more volatile or more distributed, the costs of production for everything from smartphones to turbines may shift accordingly. Consumers are not insulated from these developments.

Mounting stability in supply from Australia could imply prices remaining stable over time, especially if their volumes grow with world demand. More so in actual markets, diversified supply decreases exposure to disruption on account of policies, conflicts, or sanctions. For consumers, this could in turn mean an uninterrupted supply of electric vehicles and efficient battery technologies and a reduced risk of inflation triggered by upstream component shortages.

An absence of scaling up these alternative sources may subject markets to a vulnerable position. A case of an overreliance on a single exporter like China could have far-reaching consequences once ample strategic export controls can be imposed on such an exporter.

Historical Context and China’s Dominance

China’s dominance in the rare earths market is no accident—it is the result of decades of strategic investment, subsidised development, and export control policy. Beginning in the late 1980s, China prioritised rare earth extraction and processing, gradually underpricing global competitors and accumulating the world’s most integrated supply chain.

By the early 2000s, countries like the United States and Australia had scaled down or closed rare earth operations, unable to compete on cost or environmental terms. China’s low labour costs, lax environmental oversight at the time, and strong central coordination gave it a dominant position. In 2010, the global market received a wake-up call when China reduced rare earth exports by 40% during a dispute with Japan. Prices surged, and governments began to reassess their vulnerabilities.

This event eventually led to a World Trade Organisation (WTO) ruling against China’s restrictive practices. But the strategic message was clear: control over rare earths could be used as a geopolitical lever. The move spurred nations, including the US, Japan, the EU, and Australia, to explore alternative supplies and re-establish their refining capabilities.

Sectoral Dependency: Who Needs Rare Earths Most?

A wide range of industries depend heavily on rare earths—many of them considered cornerstones of modern industrial economies:

• Automotive sector: The rapid growth of electric vehicles has made access to magnet-grade rare earths such as neodymium and praseodymium a pressing concern. According to the International Energy Agency, demand from EV production could account for nearly 40% of global rare earth use by 2030.
• Aerospace and defence: Fighter jets, satellites, missile systems, and advanced radar rely on lightweight and heat-resistant components manufactured with rare earths like samarium and gadolinium. Strategic stockpiles are being rebuilt in NATO member states as geopolitical tensions rise.
• Wind and solar energy: Permanent magnets made from rare earths power wind turbine generators, especially offshore systems where reliability is critical. The EU’s energy transition strategy calls for a secure and diversified rare earth supply to meet 2040 emissions targets.
• Telecommunications and electronics: Everyday devices—smartphones, flat screens, headphones, and medical imaging systems—depend on rare earth-based phosphors and magnets. Global smartphone penetration nearing 80% ensures this dependency will not shrink.

This broad industrial dependence means any disruption—whether due to policy, pandemic, or infrastructure failure—has cross-sector impacts.

Market Forecasts and Long-Term Demand

According to Adamas Intelligence, global demand for magnet rare earths is projected to grow at 7–10% per year through 2035. While China’s processing capacity currently outpaces all competitors, capacity constraints and internal demand growth have left other nations exposed.

Australia’s current share of the rare earths market is around 9% of global production, but its influence is expanding. Through 2030, a combination of state-backed investment and international partnerships could help it capture up to 20% of the value chain—not just in raw extraction but in high-margin refining and oxides production.

Major funding announcements, including joint ventures with the US Department of Defence and procurement deals with South Korea’s Hyundai, are aimed at accelerating these timelines. Still, scaling requires time, infrastructure, and skilled labour—factors that have slowed past efforts in other jurisdictions.

Environmental and Regulatory Considerations

Rare earth extraction and refining are environmentally challenging. Waste from processing can include radioactive thorium and other contaminants. China’s early advantage partly stemmed from less stringent regulations, a model that countries like Australia, the US, and Canada have avoided replicating.

Australia’s operations are subject to modern environmental safeguards and community consultation, which add cost but build credibility in ESG-conscious markets. For brands and consumers increasingly focused on ethical sourcing, this could eventually justify premium pricing or favour regulated procurement tenders.

In addition, new extraction methods—such as ionic clay leaching and closed-loop recycling of rare earths—are under development. These could reduce the sector’s environmental footprint and shift competitive advantage toward countries with better technological infrastructure and regulatory frameworks.

Supporting Evidence and Global Relevance

According to the U.S. Geological Survey’s 2024 report, Australia holds approximately 4.2 million metric tonnes of rare earth reserves, ranking fourth globally. Its mine production in 2023 was estimated at 18,000 metric tonnes, placing it among the top five producers.

Global demand for rare earths has grown significantly over the past decade, particularly driven by clean energy technologies. While the exact figure for growth between 2015 and 2023 varies by source, the general upward trend—propelled by energy transition initiatives and rising consumer electronics production—is well documented.

Analytical frameworks developed by institutions such as the Centre for Strategic and International Studies (CSIS) place Australia just behind the United States as a future rare earth processing hub. In a comparative assessment, Australia scored 2.6 out of 3.0 based on factors such as regulatory environment, project pipeline, and alignment with allied policy objectives.

The 2010 WTO ruling against China for its export restrictions on rare earths, tungsten, and molybdenum remains a significant milestone. It underscored the risks of concentrated supply and catalysed global efforts to diversify rare earth sources. Australia’s current policy initiatives, including support for Lynas and Iluka, are in part a strategic response to that legacy.

Closing Thoughts

The rare earths market is undergoing a structural shift. Australia’s ambition to challenge China’s dominance has funding, policy support, and growing international buy-in. What remains to be seen is the pace at which its capacity can scale.

The effects will ripple outward. Supply diversification will influence production stability, pricing, and access to critical technologies across the world. Consumers, manufacturers, and governments alike will be shaped by how this unfolding realignment is managed.

Rare earths are foundational to global growth and security. Whether sourced from China, Australia, or other emerging players, their strategic importance is now impossible to ignore.