Resources Minister Madeleine King says Beijing move highlights need for rare earths strategic reserve

China’s action in moving to cut off the supply of rare earths and permanent magnets to the Western world underlines the need for Australia to create a strategic reserve of critical minerals.

Lynas Rare Earths’ processing plant in Kalgoorlie. Picture: Bloomberg

Resources Minister Madeleine King says China’s action in moving to cut off the supply of rare earths and permanent magnets to the Western world underlines the need for Australia to create a strategic reserve of critical minerals.

The Albanese government has remained tight-lipped about how the strategic reserve would work and the commodities involved since flagging the market intervention on April 3.

Ms King said details about the strategic reserve would be ­released before the election on May 3, and indicated the policy remained a work in progress.

She said the government continued to consult on what commodities to include in the reserve, but it was almost certain the list would include rare earths.

“That would be a fair bet given it is rare earths that has been the subject of the most trade restraint in the world,” Ms King said.

“You think back to about 12 years ago when China banned the export to Japan. That led to the investment of Japan in Lynas, so rare earth is certainly one of the most affected critical minerals.”

Lynas CEO Amanda Lacaze. Picture: Bloomberg

Resources Minister Madeleine King. Picture: Pema Tamang Pakhrin

Amanda Lacaze-led Lynas ­remains the world’s biggest non-Chinese supplier of rare earth off the back of support from Japan Inc, and is targeting first production of dysprosium and terbium oxides from its Malaysian processing plant before June 30.

China’s export restrictions on dysprosium and terbium as well as permanent magnets that include heavy rare earths have caused major concerns among Western governments and among defence and other key ­industries.

Beijing moved to restrict exports to all countries earlier this month in response to tariffs imposed by US President Donald Trump. The latest reports from China suggests shipments have ground to halt at a number of ports while government officials draft new rules that could cut of US military contractors and other Western companies for good.

Ms King said the export restrictions were concerning but not surprising given the bans put on germanium, gallium and rare earths in the past.

She said Labor’s move to create a strategic reserve was not based on similar moves in the US.

There are a raft of Bills before congress on rare earths and critical minerals, including the Secure Minerals Act aimed at establishing a US critical minerals reserve and stabilising prices, and the Rare Earth Magnet Security Act to establish a tax credit for domestic production.

“We’ve got different geological reserves, different pressures around supply, and we’ve got a much more mature mining industry in this country,” Ms King said.

“We’re better placed than certainly America and I think every place in the world to make the most of the geology. We’ve just got to address the problems of the thin markets and the difficulty of attracting capital to a low volume, high-cost set of commodities that are subject to such extraordinary market manipulation and have been for a long time. This is what everyone’s up against.”

The Association of Mining and Exploration Companies, which lobbied successfully for production tax credits for downstream processing of critical minerals, said that Labor was considering buying critical minerals from producers and stockpiling the material.

AMEC said this was a better option that applying export controls or domestic reservation policies, which would alarm industry.

Originally published as Resources Minister Madeleine King says Beijing move highlights need for rare earths strategic reserve