Australian Prime Minister Scott Morrison will announce funding for rare earths refining on Wednesday, including vital components for high-tech batteries, as the nation works with its US ally to diversify sources of the important minerals away from China.
Campaigning in Western Australia ahead of a federal election due by May 21, Morrison will announce A$243 million ($175 million) for four new projects, including a new nickel manganese cobalt battery material refinery hub in the Kalgoorie region and a vanadium refinery project led by Australian Vanadium.
The funding is part of a growing push by Morrison and his government to encourage self-reliance in important supply chains. In the announcement, Industry, Energy and Emissions Reduction Minister Angus Taylor said while Australia had some of the world’s largest reserves of rare earths, China dominated around 70% to 80% of the industry globally.
“This initiative is designed to address that dominance,” Taylor said in the statement. “These projects are not only game-changers for the local region with the creation of new jobs, they will also open up incredible export opportunities.”
Australian rare earth companies which will receive funding as part of the new policy saw their shares surge. Arafura Resources Ltd. soared as much as 23%, while Australian Vanadium was up as much as 34%.
Frosty Relations
Australia’s relations with China have grown increasingly frosty in recent years. After Morrison called for an international investigation into the origins of Covid-19 in April 2020, Australian exports began to encounter difficulties entering Chinese ports. The economic pressure led to calls inside Australia for the country to diversify its exports away from China, which is currently its largest trading partner.
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The US and its allies have been concerned for years about China’s attempt to control rare earths markets, worrying it could use its dominance to restrict access to important minerals needed for high-tech manufacturing. Beijing is consolidating the sector by merging key producers to strengthen its control over a global industry it has dominated for decades, and this year told producers of electronics and magnet materials to bring surging prices under control.
In September, Morrison’s government announced a A$2 billion loan facility in a bid to develop more critical minerals projects. Meanwhile, while encouraging partnerships with allies to develop new sources of the crucial metals through forums such as the Quad security partnership, the Biden administration last month announced a “Made in America” strategy to bolster domestic output.
Chemical Elements
Rare earths are 17 chemically related elements that have magnetic and fluorescent properties. They include neodymium and praseodymium-- used in high-power magnets -- and yttrium, used in targeting systems. While they’re not as rare as gold or silver, the elements aren’t often found in large volumes and require intensive processing to produce materials for end users.
Morrison’s announcement comes as he is struggling in opinion polling ahead of a likely May election. In recent weeks, the Australian leader has made high-profile announcements on national security spending, including a A$10 billion naval base, aimed at boosting Australia’s domestic manufacturing industry and the country’s self-reliance in the region.
