Australia’s government will inject AU$840m into a rare earths refinery in the country’s north as part of efforts to boost the country’s role in the energy transition supply chain.
Prime Minister Anthony Albanese made the announcement on Thursday, saying the rare earths refinery in the Northern Territory, which will be operated by Australian miner Arafura, would position the country as a global leader in ethical and sustainable manufacturing of these minerals.
Albanese explained: “My government is focused on a future made in Australia, and this project is an important part of that plan.
“We will deliver critical jobs and economic development in the heart of the Territory and the north.”
The importance of a domestic supply of rare earths
Rare earths are a group of 17 elements, four of which are essential for permanent magnets used in a variety of technologies, including electric vehicle batteries and wind turbines.
Australia has made efforts to reduce its dependence on China for the minerals.
However, this remains difficult as China accounts for 70% of rare earth supplies, 85% of rare earth processing, and 90% of rare-earth magnet production.
The government hopes the rare earths refinery will encourage international financiers and banks to back the project, which it says will create 300 new jobs.
The rare earths refinery is set to hugely contribute to global supplies
Speaking with Australia’s national broadcaster, Minister for Resources Madeleine King said while it was “a lot of money,” the funds were going toward a very important project that could provide up to 5% of global supply.
She said: “The refinery will be the first fully integrated mine and processing facility that will produce rare earth oxide, which will be used in really important and advanced technology for green technology and defence applications.”
Australia wants to move further downstream and capture more value from its raw material exports, particularly in critical minerals like rare earths.
It is home to Lynas, the only rare earths miner and processor with supply chains outside of China.
Under Scott Morrison, Australia’s former prime minister, the government in 2022 approved a $1.25bn loan to critical minerals company Iluka Resources to develop the country’s first rare earths refinery in Western Australia.
However, its critical minerals ambitions have faced headwinds, as other battery metals like nickel and lithium suffer from price slumps, with demand for EVs growing slower than forecast.
Nickel miners in Australia, in particular, have been hit hard by an increase in supply from Indonesia.
