Australia, explained.
“Critical minerals” as governments currently use the term are wildly heterogeneous – chemically, in market size, and their buyers and sellers (Getty Images Plus)
The elements that genuinely matter for security should be treated as defence policy, not economic opportunity.
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Not every critical mineral is equal – and Australia’s policy should reflect thisNot every critical mineral is equal – and Australia’s policy should reflect this
Prime Minister Anthony Albanese boasted twin benefits from the critical minerals deal signed with the United States last month. On the security side, Albanese said the agreement would “provide critical minerals required for defence and other advanced technologies to the United States and our strategic partners.” On the economic side, he promised it would “mean more jobs in Australia, more resilience for our economy … making more things in Australia.”
It was widely read in Canberra that critical minerals offered Albanese his strongest card going into the Trump meeting, and the warm White House and Congressional reactions suggest that assessment was right.
Critical minerals are now a way for Australia to make itself indispensable to Washington.
The two governments talked up $8.5 billion of investment over the next 12 months to bring new mining and processing projects online, although who is paying what, and for which projects, is not yet clear.
Only, the harder you try to deliver on economics and security, the more you risk doing neither especially well.
“Critical minerals” are an increasingly catch-all label that, across Australian and US lists, runs to more than 50 different elements, with every new partner adding a few more. There is no single, settled or shared list.
When the market is tiny, it simply cannot deliver economic growth in the way the government is promising.
In practice, what makes a resource genuinely critical is its potential to be weaponised. That is why rare earths, indispensable for both defence and civil manufacturing and with a supply chain heavily concentrated in China, keep coming up. Gallium, the other resource specifically flagged by the framework agreement, is vital to semiconductors and has similarly concentrated production.
The underlying goal of this agreement – and of the G7 and other multilateral efforts – is to blunt the PRC’s ability to coerce by threatening supply of a few chokepoint inputs.
For the United States, these minerals are about economic security in the narrow sense: feeding defence industry and advanced manufacturing.
For Australia, they are about national security in the alliance-management sense: being the partner that can help de-risk US supply chains buys attention, goodwill and influence in Washington.
Anthony Albanese and Donald Trump in the Oval Office last month (Daniel Torok/White House Photo)
But there is also the economic story. On paper, Australian critical minerals policy sits inside the Future Made in Australia agenda and is sold as part of the global energy transition. The problem is the energy-transition market is much bigger and very different from the small, security-significant subset that the US needs now.
Rare earths, for example, are a roughly US$3 billion global market: the Tomago aluminium smelter in NSW on its own turns over roughly $1.5 billion a year. Lithium exports alone are equivalent to eight other critical minerals, including rare earths, and with stronger growth prospects.
So “critical minerals” as governments currently use the term are wildly heterogeneous – chemically, in market size, and their buyers and sellers. There is not even a coherent class of “critical minerals producers” – the rare earths and lithium sectors are asking Canberra for quite different things.
When the market is tiny, it simply cannot deliver economic growth in the way the government is promising.
The sensible move is to reset the policy to a much narrower definition – one aligned with the minerals that could actually be weaponised.
Add to that China’s position as the global demand centre. If Australian projects are approved on the condition they do not sell into China, it means walking away from the largest pool of willing customers, which immediately complicates corporate finance and market competitiveness.
Albanese himself stressed in Washington that “China is our major trading partner” and that removing trade impediments “is about jobs in Australia”. But if Australia focuses properly on the handful of minerals that really matter for national security and for limiting chokepoints in China, it is highly unlikely to get a big growth or jobs story from this deal. Pretending otherwise just muddies the politics.
Yet because the government keeps talking about critical minerals through an economic lens, it has to act as if its planned critical minerals and rare earths reserve will generate revenue and count as an asset on the balance sheet. In reality, stockpiling is about insurance – paying to have something just in case – not commercial investment.
The sensible move is therefore to reset the policy to a much narrower definition – one aligned with the minerals that could actually be weaponised.
Such a narrowing would acknowledge that risks are not equal across every item on today’s sprawling lists. China is highly unlikely to brandish beryllium when most of the global supply comes from a single US mine, for example. What you want instead is a short, defensible list – the minerals that Ambassador Kevin Rudd argued are de factodefence assets, because they feed straight into weapons systems, sensors or the production technology that makes them.
Treating these as defence assets also lines up the fiscal logic: you overpay, you duplicate capacity, and you do it because redundancy is cheaper than discovering in a crisis that you were dependent on a hostile supplier.
Meanwhile, the minerals that do not meet this narrow test, lithium, nickel, and the platinum-group elements for instance, should come off the “critical” list and go back to a world of normal investment, trade-access negotiations and explicit, contestable industrial policy. That would make foreign investment smoother and would let government concentrate on competitiveness and real growth, not on signalling.
“Economic security” often gets sold as a way to have your cake and eat it: protect the nation and deliver local jobs. In very small, strategically exposed markets like rare earths, that is an illusion. Policy there should be framed as what it is – security and defence policy – priced accordingly, and explained that way to allies, to business, and to Australian voters.
About the authors
Eli Hayes
Eli Hayes is a student and researcher at the Australian National University, specialising in critical minerals and economic security.
Darren Lim
Dr Darren J.
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