Donna Gregory
India and Australia are accelerating negotiations to evolve their 2022 Critical Minerals Investment Partnership into joint ventures covering sourcing, refining, and processing of rare earth elements. These efforts align with evolving supply chain diversification strategies, as the current global rare earth ecosystem remains heavily skewed toward.
China’s Continued Dominance and Retail Shocks
- Production and Refining Hegemony: China holds over 44 million metric tonnes of rare earth oxide reserves—about 34% of the global total—and controls roughly 90% of production globally. Heavy rare earth element (HREE) processing is even more concentrated: 99% of that capacity is in China.
- Export Disruptions: On April 4, 2025, China imposed non-automatic licensing requirements for seven critical REEs—including samarium, terbium, dysprosium, and yttrium—alongside magnets used in defense, automotive, and energy tech.
- Volatile Exports: After hitting a record high in June, China’s rare earth exports plummeted 23% in July 2025, dropping to about 5,994 metric tons. Yet, cumulative exports for the year still rose 13% year-over-year, reaching 38,563.6 tons through July
India’s Vast Reserves vs. Minimal Production
- Reserve Rankings: India ranks third globally with 6.9 million tonnes of rare earth oxide reserves—surpassed only by China and Brazil—and houses ~8% of world reserves (Australia has ~5.7 million tonnes).
- Production Constraints: Despite this, India’s output lingers at a modest 2,900 tonnes annually (~1% of global production) due to technological bottlenecks, regulatory hurdles, and logistical inefficiencies.
- Imports Surging: India imported 53,748 metric tons of rare earth magnets in fiscal year ending March 2025—marking an 88% increase—and elevated import value to $210 million).
- Industrial Disruption: Industry analysts warn that restricted magnet supplies could cripple Indian automaking—Maruti Suzuki, Tata Motors, and others flagged imminent production halts, with Indian firms now pursuing magnet stockpiles and domestic manufacturing ramp-up.
Australia’s Strategic Strengths & Expansion Plans
- Boosting Refining Capacity: The Australian government increased financial support for its first fully integrated rare earths refinery in WA, operated by Iluka Resources—providing an extra $262 million, bringing total government backing to $1.08 billion. The project includes a no-China sales clause and aims for commissioning by 2027.
- Feedstock Diversification: Iluka struck a 15-year deal with Lindian Resources (Malawi) to source 90,000 tonnes of monazite concentrate, boosting supply diversity for its Eneabba facility. The refinery will handle 65,000 tonnes/year, targeting markets in the US, Europe, South Korea, and Japan.
- Price Floor & Market Stability: Australia is considering a price floor mechanism for critical minerals to ensure investor confidence and reduce reliance on volatile pricing—this caused notable jumps in Lynas (+5%), Arafura (+8.5%), and Iluka (+8.6%) stock prices.
- Smelter Support for Critical Minerals: Australia earmarked $87 million to sustain Trafigura-owned smelters producing critical minerals (e.g., antimony, bismuth, germanium) derived from byproducts—further securing its tech materials supply chain.
Outlook
As supply chains for rare earths and other critical minerals remain vulnerable to geopolitical tensions and export controls, the deepening India–Australia alliance is poised to become a cornerstone of global diversification efforts. If successful, these joint ventures could help shift the balance of rare earth processing away from China’s near-monopoly, bolster domestic manufacturing in both countries, and provide greater stability for industries from electric vehicles to renewable energy.
With reserves, processing capacity, and strategic will aligning, the partnership has the potential to redefine the critical minerals landscape over the next decade—transforming both India and Australia into key players in a market that underpins the clean energy transition and national security.
