Smartphones, electric cars, wind turbines and fighter jets all rely on a group of minerals most people have never heard of. Here’s what critical minerals and rare earths are, and why they’ve become a global battleground.
Critical minerals are minerals and metals considered essential to the economy and national security, but whose supply is at risk, often because production is concentrated in a small number of countries.
Lists differ by country, but they typically include lithium, cobalt, nickel, graphite, manganese and the rare earth elements.
What they’re used for
Lithium, nickel, cobalt, manganese and graphite are key ingredients in the batteries that power electric vehicles, phones and home energy storage.
Rare earths are a group of 17 elements, including neodymium and dysprosium, used to make powerful magnets found in electric motors, wind turbines, speakers, smartphones and military equipment such as missiles and fighter jets. Despite their name, many aren’t especially rare, but they’re difficult and expensive to separate and process.
China’s dominance
China mines many critical minerals, but its real power lies in processing. It refines most of the world’s lithium and graphite, and processes around 90% of rare earths.
That gives Beijing significant leverage. China has introduced export controls on several critical minerals and rare earths in recent years, including in 2025 during trade tensions with the U.S., causing shortages and price spikes for manufacturers elsewhere.
Australia’s opportunity
Australia is one of the world’s largest producers of lithium, and has significant reserves of rare earths, cobalt, nickel and other critical minerals.
Australian company Lynas Rare Earths is the largest producer of separated rare earths outside China, with processing in Western Australia and Malaysia. Iluka Resources is building a rare earths refinery at Eneabba in Western Australia with Government support.
Historically, Australia has mostly exported raw materials for processing overseas, largely in China. Governments are now trying to change that by supporting local processing.
The Federal Government has announced a critical minerals strategic reserve and offered loans and tax incentives for processing. In October 2025, Australia and the U.S. signed a framework to invest billions of dollars in critical minerals projects and secure supply chains.
The challenges
Building processing plants outside China is expensive, and Chinese producers can sell at prices that are hard to match. Prices for some minerals, such as lithium and nickel, have swung wildly, causing some Australian mines to close or pause.
Supporters say government support is needed for national security reasons. Critics warn taxpayers could end up backing projects that aren’t commercially viable.
