General news16 Apr 2025 08:21
When China increased restrictions on exports of rare earths last Friday, escalating a trade war with the US, several small Australian miners bucked the global market sell-off to register big gains.Shares in Lynas Rare Earths, Northern Minerals and Arafura Rare Earths rose on investor bets that they could be long-term suppliers of the materials western buyers need to deliver modern energy and defence systems.Lynas and Northern shares have risen more than 10 per cent in the past week, in contrast to a wider sell-off among Australia-listed miners.
Australia has been positioning itself as a key supplier of critical minerals — including rare earths used in electric vehicles and wind turbines — for more than a decade. Up to now, China’s dominance has made breaking through difficult, say analysts.
But following China’s latest export controls, Perth-based Lynas has said it is “ideally positioned”, along with peers such as Northern and Iluka Resources, to take advantage of disruptions to the global supply chain.Tom O’Leary, managing director of Iluka, said Australian companies could provide a secure source of essential materials to global suppliers. “The need for a sustainable rare earths industry is clearly intensifying,” he said.China’s latest measures — restricting exports of seven rare earths and permanent magnets — targeted so-called medium and heavy metals used in the defence, robotics and energy industries.
In practice, a car company operating a factory in China would still be well supplied with the materials it needs but may find scarce supplies for any of its factories elsewhere, said stockbroker Ord Minnett in a note.
“The message would be that if the US wants high-end permanent magnets, the factories need to be in China,” the note said, adding that defence firms could “forget” about supplies. “China does not want its rare earths returned in the form of missiles,” it said. The new Chinese controls highlight the extent of global companies’ dependence across multiple sectors — defence, energy, transport and medical — on a single source of supply, said Shane Hartwig, chief executive of Northern Minerals, which is looking to develop a rare earths deposit in Western Australia.“It is evidence of the ability of China to assert that dominance. It helps to provide evidence that single-source supply chains are a risk, from China or anyone else,” he said.Chinese mines account for production of about 60 per cent of the world’s rare earths, but the country processes nearly 90 per cent of them.
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