Resources Minister Madeleine King says stockpiling critical minerals will be a cash generator for Australia, as well as a hedge against high prices and supply bottlenecks that may arise out of geopolitical machinations such as the ongoing United States-China trade war.
Just what size that stockpile is and how much money it would generate is unknown, however King, speaking at The Australian Financial Review's Mining Summit in Perth on Wednesday, stated it will only contain “small” and “temporary” volumes of critical minerals.
The recently re-appointed Federal Resources Minister says Australia has an obligation to take a lead in the critical minerals space, as China - which has a monopoly over a swathe of critical minerals not mined elsewhere - is restricting supplies to the West.
“Everyone is aware of China’s recent export restrictions for rare earths, tungsten and graphite, and before that, bans on germanium and gallium,” King said.
“This is in addition to restrictions on the export of intellectual property and hardware required to build rare earth refineries."
We do have a veritable treasure trove of critical minerals, as Azzet laid out April:
Find out more: Mission Critical: Opportunity knocks for Australia
Australia's Strategic Critical Minerals Reserve Strategy aims to complement the federal government's already developing initiatives:
- A Critical Minerals Development Program
- An International Partnerships Program
- Shared infrastructure commitments with the WA government - pegged for an extension
- $500 million committed to Critical Minerals projects from the Northern Australia Infrastructure Facility (NAIF)
- Over $2 billion of investments into projects under the Critical Minerals Facility and NAIF
- $3.4 billion to Resourcing Australia’s Prosperity through geoscience and exploration
- A $17 billion Production Tax Credit incentive for critical minerals processing
“A strategic reserve will mean Government has the power to purchase, own and sell critical minerals found here in Australia [and will] allow us to deal with trade and market disruptions from a position of strength,” King said.
However, Lynas Rare Earths (ASX : LYC) chief Amanda Lacaze - who runs the only rare earths producer and refiner outside China - has cautioned that the plan might negatively impact her company's pricing competitiveness.
King indirectly pushed back, saying “it has been interesting to say the least to see some commentators claim the government will distort market prices when these markets aren’t functioning properly in the first place”.
“...our most successful critical minerals and rare earths producers got off the ground through a combination of hard work, innovation, commitment, and helped along from time to time with targeted support from government - both ours and those of our partners.
“I would expect the reserve will generate cashflow from sales to key partners and deliver a return to government.
“Where it is required or advantageous given market conditions, stockpiles of bespoke critical minerals may be accumulated. It is anticipated in most cases these will be small and temporary.”
King also stipulated that industry won’t be under any obligation to contribute and mineral producers won’t be required to sell into the stockpile.
Lynas itself has recently received funding from the U.S. government for a rare earths processing plant in Texas, as well as support from Japan for exploration activities in WA.
