US policy drives growth in rare earth sector

Joe Biden’s Inflation Reduction Act could drive up interest in Australian critical minerals, the US consul general to Perth says.

Iluka Resources' rare earths tailings project at Eneabba in WA.

Joe Biden’s Inflation Reduction Act could drive up American interest in Australian critical minerals projects and accelerate the development of sources that reduce world reliance on Chinese supply, the United States consul general to Perth says.

Siriana Nair on Tuesday said the act, signed into law in August, included incentives to help American companies source the critical minerals and rare earths needed in clean technologies.

She said Australia’s free trade agreement with the US meant it was very well positioned to benefit from those incentives.

“Minerals that are extracted or processed in FTA countries would be eligible for some of the benefits and subsidies and that will promote US companies to source from Australia,” she said.

“And then in terms of the batteries components themselves, if batteries are manufactured or assembled in North America in the United States, that would also qualify. So you can also see that on the battery side, you would potentially be able to manufacture parts of the battery in a country like Australia and then have final assembly done in the US. We’re starting to see US companies taking advantage of this and I think we’ll see more of that in the future.”

Successive Australian governments have talked up the potential of Australia’s rare earths industry to challenge the market dominance held by China, which accounts for 80 to 90 per cent of global rare earths supply broadly and 100 per cent of some individual rare earth elements.

US Consul General in Western Australia, Siriana Nair.

Those critical minerals are used in hi-tech applications such as electric vehicle motors and wind turbines, and more than 3000 defence technologies. An F35 fighter jet, for example, is estimated to contain 417kg of rare earths.

Speaking at an American Chamber of Commerce event in Perth, Ms Nair said the supply chain disruptions felt across the world in the pandemic showed why it was important to have suppliers from a range of countries.

She said incentives under the Inflation Reduction Act recognised that the US needed to take action to spur the development of critical minerals projects in Australia.

“You have strong commitments to the same fundamental values and principles that we all share, being democracy and supporting human rights,” she said.

“From the United States’ perspective, we are ensuring that we are putting the tools in place to be able to support that.”

Iluka Resources managing director Tom O’Leary, who earlier this year gave the go ahead for the development of a $1.2bn rare earth refinery at Eneabba in WA, said the company had started to see increased interest from potential US customers in recent months.

“The USA’s inflation reduction is only accelerating the appetite of folks in the US to get set for their critical mineral requirements,” he said. “I think that’s going to have a really significant impact on accelerating the development of critical minerals more generally and in Australia.”

Mr O’Leary said the development of the Eneabba refinery could set the stage for Australia to move further up the rare earths value chain, beyond the export of concentrates. He said Australia could eventually produce rare earth metals and alloys, and even rare earths magnets.