Australia's government has established a new $1.2 billion strategic reserve for critical minerals. This initiative aims to secure access to essential minerals such as antimony, gallium, and rare earths, which are vital for clean energy technologies and advanced military equipment. The reserve will purchase rights to Australian-produced minerals and re-sell them to meet international demand, aligning with broader international efforts to diversify global critical mineral supply chains.
Establishment of the Critical Minerals Reserve
The Australian federal government has allocated $1.2 billion for the strategic reserve. This includes $1 billion specifically for transactions, drawn from the expanded $5 billion Critical Minerals Facility, which provides government-backed loans and equity support for projects. An additional $185 million has been designated for selective stockpiling and implementation costs. The Department of Industry, Science and Resources will oversee strategic reserve transactions.
Initial minerals identified for focus under this plan include antimony, gallium, and rare earths. The reserve's objective is to boost investment in the critical minerals sector and enhance the reliability of supply chains for international partners, thereby creating stronger and more diverse supply chains. Federal Resources Minister Madeleine King stated that new legislation will be introduced to implement the reserve, expanding the powers of Export Finance Australia.
International Context and Supply Chain Diversification
The establishment of Australia's reserve occurs alongside international discussions on critical mineral supply chains. US Treasury Secretary Scott Bessent is hosting a meeting of G7 finance ministers in Washington D.C., with Australia and India also invited. The G7, comprising the United States, Britain, Japan, France, Germany, Italy, Canada, and the European Union, agreed on an action plan in June to secure supply chains and boost their economies, following a virtual meeting on the issue in December.
These efforts are part of a broader push by Western nations to reduce reliance on single-source suppliers for critical minerals. The International Energy Agency reports that China refines between 47% and 87% of copper, lithium, cobalt, graphite, and rare earths globally. Critical minerals are essential for defense technologies, semiconductors, renewable energy components, and batteries. China has implemented export controls on rare earths, with recent reports indicating restrictions on exports of rare earths and related magnets to Japanese companies.
In October, Australia and the United States signed a framework for critical minerals and rare earths, committing both countries to investing in related projects. This agreement includes an $8.5 billion project pipeline and leverages Australia's proposed strategic reserve. Following this agreement, Australia has received interest from Europe, Japan, South Korea, and Singapore regarding critical mineral supplies. Treasurer Jim Chalmers is scheduled to meet with G7 finance ministers and representatives from India, Mexico, and South Korea in Washington D.C. to promote Australia's critical minerals sector.
Strategic Minerals and Their Applications
The critical minerals targeted by the reserve and international partners have diverse applications:
- Antimony: Used in solar panels (constituting approximately 40% of the market), as a fire retardant, and as a metal hardener, particularly with lead in military products. Its global production has seen declines due to surface deposit depletion.
- Gallium: A key component in advanced semiconductors for radar systems and telecommunications. Australia currently has no major gallium production, but it can be extracted during the bauxite-to-alumina refining process.
- Rare Earth Elements: Vital for high-performance permanent magnets used in technologies such as fighter jets and MRI machines. Australia has several rare earth projects in production, including Lynas' processing facility in Kalgoorlie.
Minister King highlighted the importance of these minerals, particularly antimony, gallium, and rare earth elements, within the AUKUS context for submarine construction.
Australian Production Initiatives
Larvotto Resources, a WA-based company, holds Australia's largest antimony mineral resource at its Hillgrove project near Armidale in New South Wales. Managing director Ron Heeks stated that production at the site is expected to commence by mid-year. Larvotto Resources anticipates becoming Australia's sole critical minerals producer in the antimony sector within six months. The Hillgrove project is in its final permitting stages with the New South Wales government and is projected to produce nearly 5,000 tonnes of antimony annually over an initial eight-year mine life, contributing approximately 5% to 7% of the global mine supply.