Australia is making a major move to secure its place in the global rare earths market. The government has approved a $1 billion loan to Iluka Resources to build a rare earths refinery in Western Australia. The goal is to reduce reliance on China, which dominates the sector. Rare earths are critical for manufacturing electric vehicles, wind turbines, and defence technology.
Iluka’s Eneabba site holds a stockpile of more than one million tonnes of rare earth minerals, valued at over $650 million. This includes high-demand elements such as dysprosium and terbium. These minerals are essential for permanent magnets used in clean energy and military applications. However, processing rare earths is costly, technically challenging, and often produces radioactive waste.
According to the BBC, China currently controls more than half of global rare earth mining and almost 90% of processing capacity. The US imports around 80% of its rare earth supply from China. The European Union depends on Beijing for almost all of its imports. Experts warn that China has previously used its control of supply to gain political leverage. This makes alternative sources crucial for economic and national security.
The new refinery is expected to meet a large share of Western demand by 2030. Construction will take two years, with operations planned to start soon after. Iluka says the project will create hundreds of jobs and establish Australia as a leading rare earths supplier outside China. However, environmental management will be a challenge. Rare earth processing produces waste that needs careful handling to prevent contamination.
This investment is part of Australia’s broader strategy to build independent, secure supply chains for critical minerals. Canberra has been working closely with partners such as the US, Japan, and the EU to develop alternative sources. These partnerships aim to reduce the risk of supply disruptions and ensure access to the materials needed for the transition to clean energy.
Strategic Significance of rare earth for the Global Market
The global demand for rare earths is rising fast as countries push for renewable energy and advanced manufacturing. By backing Iluka’s refinery, Australia is positioning itself as a strategic player in this market. If successful, the project could weaken China’s near-monopoly and give Western nations more control over a supply chain that underpins future technologies.