To succeed in rare-earths mining, support the whole supply chain
To succeed in rare-earths mining, support the whole supply chain
Australia’s rare-earths industry has made substantial progress. After years of project development, government investment and efforts to diversify supply chains away from China, a new generation of Australian projects is moving towards production. Several of them are now targeting first output between 2027 and 2030. The next challenge is to ensure that this emerging production can move through commercially viable supply chains. As governments decide which projects to support, they will need to look beyond mine development to whether sufficient processing capacity, manufacturing demand and offtake will be available when production comes online. Australia does not need to replicate every stage of the rare-earths supply chain domestically, but it does need to ensure that Australian production is connected to viable downstream capacity and customers in Australia and partner countries.
Australian rare-earths projects (2026–2030)
Among the Australian projects moving towards production, some already have clearer pathways into downstream processing and markets. Rare-earth element (REE) concentrate from Astron Limited’s Donald project is intended to be processed by US company Energy Fuels at its White Mesa facility in Utah, subject to final investment decision. Goschen and Browns Range are set to supply Iluka’s Eneabba refinery in Western Australia, while Arafura Rare Earths’ Nolans project has secured binding offtake agreements with Siemens Gamesa, Traxys Europe, Hyundai and Kia. Together, these agreements provide pathways to downstream processing capacity and customers. Other projects, however, have less certainty. North Stanmore has a non-binding arrangement with a prospective downstream partner, while Dubbo, Fingerboards and Avonbank have yet to secure binding offtake for their planned production.
Processing and offtake arrangements will become increasingly important if Australian production expands without corresponding growth in processing and manufacturing capacity. The International Energy Agency finds that by 2035, existing and announced refining facilities in diversified regions will have capacity equivalent to around two-thirds of expected mined supply, while planned magnet production will account for only around one-third.
Government decisions around funding REE mining projects will therefore need to account for when downstream capacity becomes available, as well as where gaps in processing and manufacturing capacity remain. The Australia–United States Critical Minerals Framework already provides for the joint identification of projects across the supply chain that address priority gaps. Government investment should be coordinated and sequenced across the supply chain so that production, processing and manufacturing capacity come online when they are needed.
Expanding downstream capacity will not by itself create a commercially viable supply chain. REE production and processing remain highly concentrated in China, increasing the risk of supply-chain disruption. This vulnerability was evident after China introduced new export licensing requirements in April 2025, which saw a sharp global slowdown in permanent-magnet exports. By May 2025, the drop had amounted to a 70 percent year-on-year decrease.
A 2026 International Monetary Fund assessment of 21 REE projects outside China found that many sat towards the upper end of the global cost curve, with only a limited number profitable at current prices. It estimated an average break-even price of US$77 (A$108) per kilogram of neodymium-praseodymium for projects outside China, compared with a 2024 global market price of around US$55 per kilogram of neodymium. More than half of the estimated cost gap between Chinese and non-Chinese producers came from refining. This cost gap reveals that building diversified capacity is likely to require continued government support.
In May 2026, the Australian government made a non-binding commitment through the Critical Minerals Strategic Reserve to purchase up to 500 tonnes of REEs annually from Nolans for five years, supporting Arafura Rare Earths’ final investment decision to develop the project. In the US, government support for REE company MP Materials addresses both price and demand risk. Its agreement guarantees a minimum price of US$110 per kilogram for neodymium-praseodymium over 10 years, alongside a long-term commitment to support demand for magnets from MP Materials’ planned manufacturing facility in Texas. The Australian and US arrangements address different commercial risks: Nolans has greater certainty over demand, while MP Materials is also protected against falls in market prices. Iluka’s first binding offtake agreement for Eneabba combines both approaches, with prices set at the higher of a minimum price or a market-linked price.
Australia should build on existing partnerships that connect its emerging REE production with downstream capability and demand. Australia and Japan are already coordinating investment in strategic projects and matching Australian producers with Japanese industrial demand. Germany presents a further opportunity. Through its Raw Materials Fund, it has invested up to 50 million euros (A$80 million) in Nolans to secure neodymium-praseodymium for German and European industry. Australia should build on these links to connect emerging production with processing, manufacturing and customers across partner countries.
Australia does not need to replicate every stage of the REE supply chain domestically. But as new Australian projects come online, government support will need to account for where they fit within the supply chains being developed by partner countries. That means considering whether downstream capacity and demand will be available, as well as how different forms of government support affect the market these projects will enter. For Australia, a commercially viable REE supply chain will be an interdependent one.
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