Australia’s future prosperity will not be built on nostalgia for past booms.
It’ll be forged in the critical supply chains of tomorrow. That’s why Prime Minister Anthony Albanese’s announcement of a $1.2 billion Critical Minerals Strategic Reserve, should Labor be re-elected, is an essential move.
The reserve is smart, pragmatic policy targeting both supply and demand aspects of Australia’s critical minerals sector. Executed properly, it will shore up Australia’s economic and geopolitical interests in the face of the global energy transition, geopolitical fragmentation and economic coercion.
Although it’s an important step, if policymakers and industry leaders are serious about delivering sovereign capability, they must build durable partnerships and plan for market instability.
Building a resilient and competitive alternative to China’s critical minerals dominance is a global strategic challenge. It’s a task far bigger than Australia alone can solve.
It demands deep, sustained co-operation with like-minded partners, particularly Japan, the United States, South Korea, India and the European Union.
While calling the announcement visionary may be a stretch, it’s a crucial addition to Australia’s long-term strategy. It signals a serious move beyond simply mining and exporting raw materials, toward making Australia a reliable supplier of refined, high-value minerals.
The reserve’s structure mirrors recommendations made at ASPI’s Darwin Dialogue meetings in 2023 and 2024. It’ll operate through two key mechanisms: government-backed offtake agreements and selective stockpiling.
Offtake agreements are already a familiar tool in the mining sector.
The innovation here is that the Australian government will become the buyer, anchoring investment, setting stable price limits and smoothing market volatility for producers and customers alike.
Stockpiling will complement this by building reserves of priority minerals to sell strategically into trusted domestic and international markets rather than simply holding resources in reserve.
Together, these mechanisms will stabilise supply, support market confidence and direct value chains away from politically coercive actors.
China’s dominance in the global critical minerals sector results from decades of deliberate policy.
Early action, subsidies, export controls and aggressive price manipulation have created structural dependencies that cannot be overcome through goodwill alone.
There have been few viable options but selling into Chinese-controlled markets.
Supply chains that depend overwhelmingly on a single actor, particularly one willing to weaponise economic relationships, are inherently insecure.
Labor’s proposed reserve accepts this reality and offers a practical response.
Australia cannot assume that action alone will be sufficient. The uncertain trajectory of US industrial policy only reinforces the need for Canberra to work harder with Japan, South Korea, India and the EU.
Building joint stockpiles, pursuing shared downstream investments and integrating offtake arrangements will be essential if Australia and its partners are to create a genuinely diversified and resilient supply chain.
Genuine engagement with Australian industry leaders who have fought to stay viable in a hostile global market will be equally important.
Companies such as Lynas Rare Earths, Iluka Resources and Arafura Rare Earths have hard-earned experience navigating the commercial, technological and political challenges of critical minerals supply.
Their operational knowledge, market intelligence and risk management lessons will be crucial in shaping a strategic reserve that is commercially realistic and strategically effective.
These companies know firsthand the difficulties of competing against state-backed Chinese giants that benefit from subsidies, price manipulation and market coercion. Despite these distortions, they’ve built capabilities that are globally competitive. Ignoring their experience would be a strategic mistake.
The proposed reserve fits neatly into the broader Future Made in Australia agenda. It complements the $7.1 billion in production tax credits designed to reduce production costs and strategic investments in Australia’s advanced battery and solar industries.
This layered approach to supply, demand and value-add is exactly what Australia needs.
In time, Australia must pursue co-investment strategies with trusted international partners, moving beyond simple export models to building integrated supply chains.
Strong partnerships with industry will also be essential to scaling up capability and de-risking future investments. As will investment into educating and training the necessary workforce.
The next government should continue to implement critical mineral policy not just as a national security imperative but one that would be seen by the US and other allies as in their interests too.
The critical minerals sector offers Australia a once-in-a-generation opportunity. It is a chance to move beyond the traditional resource economy and lead in enabling the global energy transition and building high-value technology ecosystems.
The Critical Minerals Strategic Reserve is a smart foundation and a necessary one. But Australia must act decisively, build strategically, work with trusted partners and listen to its battle-hardened industry leaders if it’s to fully realise this moment’s economic and strategic promise.