Critical minerals are having a moment. Prime Minister Anthony Albanese is at the White House to promote Australia’s rich deposits to President Donald Trump. What are critical minerals, and why they matter to Australia.
Meanwhile, China, which wields a global stranglehold on rare-earth elements, has recently imposed fresh export restrictions, much to Trump’s annoyance. It’s clear there’s an era of global competition underway.
Critical minerals are essential for manufacturing advanced technologies — such as artificial intelligence (AI), electric vehicles and renewables. Governments everywhere are racing to secure their future supply. Australia holds vast reserves of lithium, rare earths, cobalt and tungsten. This presents both a golden opportunity and a looming challenge.
What are they?
Critical minerals are the raw materials used to manufacture objects like mobile phones, wind turbines and weapons. They underpin the technologies of the next industrial age — from lithium-ion batteries to F-35 fighter jets. There is no single list of critical minerals, as each country has its own definition of what is essential. The Australian Government describes them as elements indispensable for modern technologies, the economy and national security — where supply chains are vulnerable to geopolitical risk. In Australia, the 31 minerals and rare earths defined as ‘critical’ include lithium, magnesium and zirconium. Rare earths are heavy metals used in electrical and magnetic components. While these elements are not genuinely rare in the Earth’s crust, they occur in low concentrations and are difficult and expensive to extract.
Geoscience Australia has mapped extensive deposits of critical minerals across the continent. Accessing them could position Australia as a key supplier to global clean-energy industries.
A booming industry
Australia’s current Critical Minerals Strategy sets out a plan to move from simply mining and extracting these minerals to going further — including refining, processing and manufacturing them domestically.
This is backed by initiatives such as the A$4 billion Critical Minerals Facility and a new 10% production tax credit for onshore refining. Together, these policies form a strong foundation for stimulating domestic mineral-processing investment. However, their effectiveness will depend on how swiftly they can translate into operational projects. Mining companies such as Arafura Rare Earths and Alpha HPA are already developing chemical-processing plants for magnet materials and high-purity alumina. The CSIRO-led Critical Minerals Research & Development Hub is pioneering new refining technologies enabling domestic production of high-value materials. Australia’s technical capability, long seen as lagging behind its geological advantage, is catching up. Yet most of Australia’s critical minerals are still exported in raw form. Domestic processing and refining remain limited, while high energy costs and workforce shortages constrain growth. Australia still relies heavily on overseas processing, which limits the economic benefits derived from its resources. Extracting critical minerals also has a considerable environmental footprint: for example, producing one tonne of lithium can emit 15–20 tonnes of CO₂ and consume 77 tons of fresh water. The Government will need to invest in sustainable technologies with minimal environmental impact.
A tightening global race
The urgency to act has intensified amid escalating US–China trade tensions. In recent weeks, China imposed tighter export controls on rare-earth materials and magnet technology, forcing foreign firms to seek special approval to export items containing even trace Chinese content. In response, President Trump announced a 100% tariff on Chinese imports from next month, a move designed to decouple US supply chains from Chinese dominance.
This geopolitical shift presents both risk and opportunity for Australia. Washington is accelerating investment with Australian miners to diversify its supply chains away from China. Canberra, for its part, is exploring a Critical Minerals Strategic Reserve — an investment initiative under which the federal government would acquire agreed volumes of critical minerals from commercial projects, selectively stockpile them, and offer preferential access to allied buyers.
Global energy giants are turning their focus to critical minerals. With such deep-pocketed players entering the field, the pace towards commercial-scale extraction technologies is set to accelerate dramatically. Australia must keep up if it wants to stay ahead in the race.
And now: commodities, currencies and a strategic shift
An important recent development links back to the minerals trade — but with a twist. According to the Breakwave Advisors article “BHP and China: Yuan Settlements Mark a New Phase in the Iron Ore Dispute”, the mining giant BHP Group has reportedly agreed to settle around 30 % of its spot iron-ore sales to China in yuan (renminbi), rather than US dollars.
This shift is no mere commercial detail: it reflects China’s long-term ambition to reduce its dependence on the US dollar in commodity trade, and to gain greater pricing power in the iron-ore market. The dispute between BHP and China’s iron-ore buying group China Mineral Resources Group (CMRG) has been building for some time, with reported tensions over pricing mechanisms and currency of settlement.
The significance is two-fold:
First, this instance underscores how critical-minerals trade is not isolated from broader commodity and currency dynamics. Australia’s strategic minerals narrative must be considered in a context that includes iron ore, trade flows and financial leverage.
Second, it shows how global supply chain dynamics and currency usage are intertwined. For Australia, which relies heavily on commodity exports, the risk is that settlement currency shifts or trade-flow changes could affect revenue and strategic bargaining power.
In short: the control of supply is key — and so is the control of pricing, currency and contract terms. Australia’s advantage in critical minerals is meaningful — but only if governance, downstream processing and strategic diplomacy advance at matching speed.
