Storm clouds from Donald Trump’s trade war with China could see the sun rise on a new industry for Australia.
- Rare earths are a group of 17 minerals vital for electronics — from windfarms to vacuum cleaners, mobile phones to fighter jets
- China holds about 40pc of the world’s rare earths reserves but controls about 90pc of production
- Experts say Australia could build a $100 billion industry in mining, processing and manufacturing with rare earths
In the tit-for-tat trade war, China has made veiled threats to withhold access to its processed rare earths.
That has seen the US and other Western countries scrambling to find new, reliable sources of the 17 minerals vital for everything from iPhones to fighter jets.
Processing rare earths is expensive and polluting so, up to now, it has been something developed nations have been happy to send offshore.
But that history of relying on China now has buyers nervous and Australian miners are hoping that adding value to their product will give them the upper hand.
Miner Northern Minerals is piloting facilities in Western Australia to not only dig up rare earths ore for export, but to partially process it.
“There is no question we need to act quickly and work out a way how can we accelerate this,” Northern Minerals managing director George Bauk told The Business.
The Western Australian miner is piloting facilities at its Browns Range project, south-east of Halls Creek, to separate dysprosium from its surrounding ores.
Mr Bauk said the world has allowed a “constipated supply chain” to develop out of China.
“We really have to get into separated rare earths and that way you can really access global markets, not just China,” he said.
The world’s second-biggest economy has about 40 per cent of global rare earths reserves but controls 90 per cent of the market, from mining through to processing.
It is also a major player in the supply chain, manufacturing items such as rare earth magnets, which are vital in technology including electric vehicles.
Nic Earner, the managing director of New South Wales miner Alkane Resources, said that dominance means China also controls prices.
“People who control the supply chain control the pricings,” he said.
“We want to have as little exposure for ourselves as a company to that supply pricing being dictated by anyone else.
“We’re happy to be part of a global market, but we’re not happy to have terms dictated to us that we can’t avoid.”
Alkane Resources is focusing its attention on rare earths production at its Dubbo project.
It recently invested more than $1 million to develop technology that will convert separated rare earth minerals into magnet metals.
‘This is a further value add that we are hoping will entice customers to engage with us and commit,” Mr Earner said.
“It will allow us to produce metal and that’s an important step in the supply chain.”
Developing the rare earths supply chain in Australia could be a massive boon to the economy.
Professor Dudley Kingsnorth is one of the world’s leading minds when it comes to rare earths.
He said Australia is already the best-placed country in the world to try to grab some of the estimated $3 billion to $5 billion in raw rare earths production.
However, he argues that doing more than just digging up the dirt containing rare earths could inject a much larger amount into the economy.
“$100 billion is what could ultimately be achieved in Australia, but that would take 10 to 15 years to do,” he said.
“But that’s the sort of value we’re talking about.”
To capture all that value requires doing more than just processing the raw rare earths — it also means manufacturing final products that use the materials.
“In five to seven years we should be producing magnets here in Australia and incorporating them in the manufacture of some equipment that’s made here in Australia as well,” he said.
“China is going to remain the dominant supplier. But I do believe we can develop some independent supply chains so their dominance will fall from say 90 per cent to 70 per cent.”
Expanding beyond being a quarry is something Dr Chris Vernon at the CSIRO has been looking into too.
“If Australia could develop that rare earths industry, then we could be making significantly more money out of what we currently export as a raw concentrate,” he said.
“Any time you go up the value chain, you are creating value.
“So, going from the dirt in the ground to a concentrate is a small increase in value. Going from concentrate to the mixed oxides, that’s another leap up the chain.
“When you start making magnet metals, that’s a very large leap up the value chain.”
New manufacturing sector
While a renaissance in the car manufacturing industry is unlikely, smaller items using rare earths, like vacuum cleaners and air conditioners, could end up being manufactured here too.
“We can’t go as far as perhaps attracting the automotive industry here, but I like to think perhaps we can attract Dyson here and some of the air conditioning manufacturers to Australia to produce that equipment here,” Professor Kingsnorth said.
That is a huge potential new industry for Australia.
“There’s almost nothing that you can hold in your hand that’s a piece of technology that doesn’t have some rare earths,” Dr Vernon said.