Beijing locks down access to critical minerals in boost for Lynas, Northern Minerals

Rare earth stocks defied the market carnage as China’s move to restrict exports threatened key industries like defence and renewables.

China has a stranglehold on heavy rare earths supply and has imposed the export restrictions on all countries, a move that has consequences for the production of weapons, electric vehicles, wind turbines and in aeronautics. Picture: AFP

Northern Minerals chief executive Shane Hartwig says it is only a matter of time before defence and other key industries are hit by Chinese restrictions on the export of rare earths and permanent magnets.

China weaponised heavy rare earths in response to 34 per cent tariffs imposed by US President Donald Trump last week.

China has a stranglehold on heavy rare earths supply and has imposed the export restrictions on all countries, a move that has consequences for the production of weapons, electric vehicles, wind turbines and in aeronautics.

Restrictions apply to medium to heavy rare earths, including terbium and dysprosium, as well as permanent magnets that contain heavy rare earths ingredients. Beijing’s move comes as the Australian government develops plans for a critical minerals strategic reserve it may use as leverage in trade negations with the Trump administration.

Lynas Rare Earths, the biggest non-China supplier of the ingredients, was one of the few listed mining stocks to defy the carnage on the ASX on Monday, up 3.1 per cent. Northern Minerals shares closed flat.

Mr Hartwig said China wielded huge power over heavy rare earths supply chains. Terbium and dysprosium are used in everything from missile guidance systems, jet fighters and satellite communication systems to robotics. “It’s just more evidence of the ability of China to effectively assert its dominance on the rest of the world in the mining and processing of these rare earths,” Mr Hartwig said.

“It’s no surprise that the restrictions have come out as a response to the 34 per cent tariffs and it really reinforces the need for the development of supply chains for the heavies in particular outside of China.

“That’s what Northern Minerals and Iluka (Resources) are trying to do with our Browns Range project and at Eneabba.”

Northern Minerals managing director Shane Hartwig. Picture: Renee Nowytarger

The federal government has had to intervene to force Chinese-linked investors to divest shares in Northern Minerals, which controls the strategically important Browns Range project that is rich in terbium and dysprosium.

Iluka has received $1.65bn in taxpayer funding to build Australia’s first fully integrated rare earths refinery at Eneabba, which is expected to source terbium and dysprosium from Browns Range.

The two heavy rare earths make permanent magnets work in high-temperature applications.

Lynas said it was watching developments. “Lynas is ideally positioned to take advantage of favourable rare earths market conditions and meet the needs of magnet buyers,” a spokeswoman said.

The Amanda Lacaze-led Lynas is targeting first production of dysprosium and terbium oxides from its Malaysian processing plant before June 30. It will be the only source of separated heavy rare earths outside China once in production.

Lynas is a long-time miner and processor of light rare earths but currently sells all of its heavy rare earths into China in concentrate form for further processing.

JP Morgan analysts said Lynas offered the best exposure to rare earths in the short term, but warned some Western supply chains could grind to a halt if China’s export restrictions were prolonged.

“A flight to ex-China producers (Lynas) makes sense in the context of the recently announced restrictions, as higher demand for magnets out of Japan/Korea etc increases demand for Lynas product,” the broker said.

“What is less clear, is how long the ex-China supply chain can sustain high-temperature magnet production without dysprosium/terbium feed coming in from China.”

Mr Hartwig said the restrictions would make permanent magnet production outside of China very difficult.

“Depending on the amount of stockpiled material, how the restrictions work and whether they do turn it into a ban, it’s certainly going to have an impact,” he said.

Mr Hartwig said he would support critical minerals market intervention by the Australian government that included a floor price mechanism. He said this would help to finance and build projects like Browns Range.

Originally published as Beijing locks down access to critical minerals in boost for Lynas, Northern Minerals