Australia eyes rare earth deposits as uncertainty looms over China

Perth: Australia will step up production of rare earths and other militarily sensitive "tech metals", the country's defence minister said, on Monday, as doubts grow over the reliability of Chinese supplies.

Linda Reynolds told an audience in Perth that resource-rich Australia had deposits that could safeguard supplies for allies including the United States and Britain.

So-called tech minerals are used in everything from smartphones and lasers to avionic systems and electronic warfare technologies. But trade tensions have led China to warn that supplies of could be choked.

China produces more than 95 percent of the world's rare earths, and the United States relies on it for upwards of 80 percent of its imports.

Reynolds stressed the importance of Western allies obtaining the metals from outside China.

"(In) Australia we have at least 40 percent of the known reserves of tech metals, whether it's lithium, cobalt, nickel, graphite but also most of the rare earths that our current technology and our lifestyles today relies on," she said.

She added that it had been discussed at length at recent Australia-US ministerial consultations and in discussions with British counterparts.

"What we want to do is make sure we have a guarantee of supply," she told reporters in Perth.

"A lot of our defence equipment and capability actually uses rare earths in its production.The key issue for Australia, the US and other allies is the continuity and guarantee of supply of these rare earths and tech metals as they're now called is an issue of national importance", she said.

Jeffrey Wilson, head of research at the Perth USAsia Centre, said there is roughly USD 350 million global trade in rare earths per year, with China also having a disproportionate share of processed products such as carbonates and magnets.

In the case of dysprosium -- which can be used in magnets for electric vehicles or nuclear reactor rods -- it is 100 percent.

"China's near monopoly means there's no real genuine or reliable international market for rare earths trade," Wilson said.

"Its outsize market power also gives the Chinese government considerable scope to control and shape global trade patterns," he added.

Reynolds' comments followed news of a deal between German industrial giant Thyssenkrupp and a mining company developing a rare earths project in northern Australia.

Sydney-listed Northern Minerals announced Thyssenkrupp Materials Trading would take 100 percent of the heavy rare earth carbonate from its AUD 56 million Browns Range pilot plant project.

Northern Minerals had earlier terminated a two-year-old agreement with a Chinese firm. The Australian company aims to develop the world's first significant producer of dysprosium outside of China.