Australia’s richest miner Gina Rinehart set for windfall as Canberra takes on China in critical minerals
Resources minister Madeleine King said the government could copy the Trump administration and take equity stakes in rare earths companies, but would set the bar very high.
Mining billionaire Gina Rinehart is one of the big winners from the Albanese government’s move to set a floor price for rare earths to combat Chinese market manipulation.
Mrs Rinehart is a major backer of Lynas Rare Earths, the world’s biggest non-China producer, and has an 8 per cent stake in another aspiring ASX producer in Arafura Rare Earths.
The Australian revealed late on Monday that Australia would follow the lead of the Trump administration and create a floor price for rare earths. The move lit a fire under stocks on Tuesday with the Lynas share price jumping 5 per cent and Arafura 8.5 per cent.
Iluka Resources, which is building Australia’s first fully integrated rare earths refinery on the back of $1.65bn in taxpayer support, rallied 8.6 per cent.
Resources minister Madeleine King shed more light on Tuesday at the Diggers & Dealers mining conference in Kalgoorlie.
Ms King declined to speculate on where the floor price would sit, but revealed the government was open to taking equity stakes in rare earths companies.
The US Department of Defense last month moved to take a 15 per cent stake in MP Materials, the biggest rare earths producer in the US, and an ultimately failed merger partner of Lynas.
Mrs Rinehart also owns 8.5 per cent of MP Materials, which has been on a tear since the US committed to $US110 per kg for its neodymium and praseodymium for a decade.
Arafura chief executive Darryl Cuzzubbo said an Australian floor price would disrupt China’s dominance and ability to dictate price and supply of rare earths and permanent magnets essential in defence and other industries, including robotics and electric car making.
The floor price comes under the scope of the Albanese government’s critical minerals strategic reserve.
Mr Cuzzubbo said any reserve for rare earths should be linked to a non-China controlled price index such as the one established by Benchmark Mineral Intelligence.
“That will fast track a functioning market for rare earths, and that will bring about a diversified supply chain of rare earths. A floor prices helps, and we’ve seen it in the US, to kick start that index,” he said.
“It just speeds up that whole process from an investor perspective. Pricing is typically about $US60-$US70 a kg controlled by China.”
Mr Cuzzubbo said Australia would rapidly create a functioning rare earths through it floor price and strategic reserve.
Arafura is already one of the beneficiaries from the government’s big bet on rare earths. It has received $US225m from Export Finance Australia (EFA) and the northern Australia Infrastructure Facility toward its Nolans project in the Northern Territory. It also has $US200m in standby financing allocated by EFA.
Ms King said on Tuesday that the government had a number of special investment vehicles that had been enabled through legislative changes to take equity stakes and it was possible the government could pull that trigger in rare earths, too.
“It’s a high bar to get over (but) you certainly wouldn’t rule it out,” she said.
“The critical minerals industry faces an international market that’s opaque, subject to manipulation, and therefore some of these projects are really challenging to get off the ground.
“The government has to step up to take on our responsibility to lead on critical minerals and rare earths globally. Otherwise, we will have a supply chain that is simply one way.”
In defending the government’s move to set a floor price and create a strategic reserve using taxpayer funds, Ms King reiterated that she expected the imitative to make a profit.
She also welcomed moves by US aluminium giant Alcoa and Japan’s Sojitz Corporation and Japan Organisation for Metals and Energy Security to work on producing gallium in WA.
Australia and the US consider gallium a critical mineral, and Japan lists it a mineral important to national security.
Gallium production is concentrated in China, which imposed export bans in 2023.
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