On Monday, the Hyatt Regency in Sydney hosted The Australian British Chamber of Commerce’s Rare Earth and Lithium – The Australian Advantage event with keynote speaker Lynas Rare Earths Ltd chief executive Amanda Lacaze.
Lacaze spoke about Australia’s need to increase the sovereign capability of its critical minerals and to ensure that local companies remain local.
Australia must take advantage of its position in a rare earths industry that feeds into the need for components in various devices, including smartphones, computers, electric vehicles and energy-efficient light bulbs.
Australia needs local heroes
While welcoming investment from China, Lacaze warned that although Chinese investment might benefit the economy, Australia should not compromise the need for resilient supply chains in exchange for short-term financial gains.
“There is no question that a number of Chinese investors are particularly interested in the Australian minerals industry and rare earths in particular. We cannot speak to the need for resilient supply chains and deal with that logistically, but then give it up financially,” Lacaze said.
“I don’t think we should give over ownership in our minerals firms and particularly in the ones critical for future businesses.”
Lynas stands as the sole significant non-Chinese processor of rare earths, a position Lacaze attributes to historical errors by Western nations who assumed that a developed China would adhere to a rules-based culture.
“The Chinese worked out a lot earlier than anybody else (the importance of rare earths) and spent 30 years actually developing a rare earths industry,” she said.
“By 2010 there was no outside China mining or processing of rare earths. And that happened because people in the West believed in globalisation, believed in the concept that we will outsource or we will locate economic activity in the area at best fit.”
Lacaze highlighted Lynas as a prime example of China's attempts to protect its monopoly in the sector. This was notably evident in 2010 when Beijing restricted Japan's access to rare earths following a diplomatic incident.
“Japan was one of the early key funders and continuing partners of rare earths,” she said. “China implemented a strategic marketing plan and cut the guts out of the price for a long time … and the result was that Molycorp went into Chapter 11 in 2015.
“We survived because we could run our asset by that stage … and because the Japanese government held our hands very tightly during that period and supported us.”
Japan and the United States were identified as having effectively addressed challenges in the rare earths market, emphasising the need for ongoing support to counterbalance China's influence in this sector.
“The 30 years of neglect will not be fixed by clicking your heels three times,” Lacaze said.
“We are strong advocates for the fact that governments should invest in things like infrastructure into which we can then be successful rather than necessarily picking winners.”
Emerging companies
Australia has several emerging companies exploring for rare earths elements at a time when the Australian government has launched its Critical Minerals Strategy, aiming to capitalise on the nation's significant critical mineral resources.
The global demand for REEs is forecast to reach 315,000 tonnes by 2030 and Australia is the world's fourth-largest REE producer.
Australia has seen its output grow from 1,995 tonnes in 2011 to an annual capacity of 24,000 tonnes as it looks to diminish reliance on China, particularly in downstream capacities.
Australia is expanding its part in the supply chain.
We recently took an in-depth look at the companies to keep an eye on in this space.
Read: ASX REE stocks are talk of the town during September quarter