Much of the modern world runs on the foundations of a series of minerals found abundantly in few countries. These ‘rare earth’ minerals are some of the most valuable finds because many different industries and countries rely on them as primary resources.
Historically, China controlled most of the rare earth minerals industry. However, Australia has recently shown great potential in the market. Ultimately, the goal for the country is to increase value-added processes to the sector so workers and companies benefit economically. Opportunities within Australia’s mining sector are booming, particularly within the rare earth industry and foreign business and investors are eager to get a piece of the action.
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Australia´s Mining Future – Global dependence on rare earth minerals
Rare earth minerals are a series of seventeen different elements found in the Earth’s crust. The elements, all metals, are typically found altogether because they have complementary physical and chemical properties. This makes finding a reserve of them extremely lucrative because large quantities are discovered at one time.
The value in these metals comes from their inherent properties. They all have high conductivity properties, which makes them valuable in virtually all industries these days.
Given the physical and chemical properties, these seventeen metals have become essential for everyday life in the modern world. Nearly everything is dependent on the mining, refining, and processing of these minerals into functional parts and components. Most notably, products like cell phones, kitchen appliances, electric cars, and even military equipment are some of the most common and widely used goods that require the properties of rare earth minerals to function.
Australian access to resources
Experts estimate that Australian mines contain about 2.8% of the world’s total rare earth minerals. As of 2019, the country has the fifth highest reserves of the valuable minerals worldwide, amounting to an astonishing 3.4 million metric tons. Moreover, in 2018, Australia mined the second largest quantity of rare earth minerals. Recent successful activity within the sector has sparked the interest and attention of foreign businesses and governments worldwide.
Global interest stems from countries looking to wean off their dependence on China for rare earth minerals. Recent tensions between the country and other world powers position Australia as the next reliable supplier of the ever-essential metals.
China has long since dominated the rare earth minerals industry. Historically, the country overtook the market by selling the metals at below-equilibrium level prices. This put other countries’ rare earth industries out of business because they couldn’t compete with such low prices. Currently, China practically has a monopoly on the business, making up 90% of world production and processing. Total, it has over 44 million metric tons in rare earth mineral reserves.
However, the secret to their success not only lies in surplus of natural resources, but also in the fact that they are masters at incorporating ‘value added’ processes into the goods. For example, instead of selling the raw materials of rare earth minerals, the country processes the materials into sellable goods. This means they can spend very little on converting the minerals to products. Additionally, they can then charge consumers much more because of the value-added aspect.
Global friction with China
With China being responsible for 40% of the world’s rare earth reserves and controlling 90% of global production and processing, other global powers are getting anxious. In 2010, political tensions with Japan prompted China to cut off exports of the essential materials for some period of time.
Currently, with the heated trade war between the US and China, experts are predicting China will pull this same stunt with the US. Ultimately, this is making other global powers weary as well. Given that the world pretty much runs on these metals, China has come to find that they have a pretty strong bargaining chip in their hands.
Opportunities for Australia
While China dominates the market based on numbers, Australia is increasing in popularity. Recently, economic and political tensions between China and other economic powerhouses sparked a global effort to find other markets for rare earth minerals. Thus, Australia can leverage deals with developed countries. For Australia to be successful, the key is to create a sustainable and seamless supply chain for rare earth minerals. Moreover, instead of selling the minerals as is, the country should adopt stronger value-added initiatives, so as to profit more from exports.
According to Professor Dudley Kingsnorth, Curtin University Head of Critical Materials Initiative, Australia has much to gain. Should Australia and foreign investors increase rare earth mining efforts, the industry will be worth between AU$3 and AU$5 billion. However, if they incorporate and develop worthwhile value-added processes to the system, it could turn into an AU$100 billion industry within 10 years.
Efforts in renewable energy
Worldwide, countries are looking to increase dependence on renewable energy resources. Efforts are being made by numerous nations to be running 100% on renewable energy by 2050. Australia’s business and sustainability initiatives match up with these goals. Lucky for Australia, renewable energy, its machinery, processing, and distribution all require materials made from rare earth metals. Governments lobbying for a reduction in energy consumption by 20-30% could be looking to Australia to fuel these efforts. Additionally, more people are switching to electric cars, a product which essentially runs off the products of rare earth materials.
Australia is ready to meet this increase in demand. Researchers are developing value-added systems to meet the needs of the renewable energy sector and the electric car market. In the works right now is the development of rare earth alloys and permanent magnets to replace the inefficient ones in the market now. Additionally, they are working on producing a concentrate which separates rare earth minerals so they can be used individually, should the need arise.
Invest in the future
Australia is making strides in being the way of the future. It is looking to supply global renewable energy demand, while also creating innovative products and processes to improve existing operations. Given global tensions surrounding China and their monopoly on the rare earth market, Australia can capitalize now. Collaboration and funding from foreign businesses and investors will only speed up the inevitable success.
Excited by the opportunities in Australia’s rare earth minerals industry? Ready to contribute to the future of the world’s energy, technology, and transportation sectors? Looking for more information on what’s to come? Reach out to our team at Biz Latin Hub. We can provide you with assistance in back-office services to ensure a smooth transition into the market. Contact us here with questions or interest.