Unlocking Australia’s rare earth minerals presents both opportunities and challenges

These opportunities will be further enhanced if commitments to streamlining planning and environmental approvals by the Australian government are achieved, including the reform of the Environment Protection and Biodiversity Act 1999 introduced in parliament this week.

The deal makes clear that Australia intends to heavily expand its critical minerals and rare earth industries, as global markets grapple with China’s dominance in the sector. China recently announced new restrictions on the export of several rare-earth metals that are essential for tech and defence industries globally, which has now been put on the backburner following trade talks with the US this week.

Prime Minister Anthony Albanese, when announcing the framework, said that it will “see more investment in Australia and provide critical minerals required for defence and other advanced technologies to the United States and our strategic partners”.

Australia is home to around 31 critical minerals that are considered high value, including nickel, tungsten, lithium, and silicon. The framework seeks to protect the supply of criterial minerals, used in electronics, renewable energy projects, electric vehicles, defence systems and medical imagining equipment, from global supply shocks, geopolitical tensions and national security concerns.

Australia has two operating rare earth mines and no major processing facilities. Once mined, the ore from the operating mines is shipped to Asia to be processed. A major focus of the framework is the development of downstream processing in Australia’s domestic market.

Australia and the US will jointly identify projects of interests that address gaps in priority supply chains and, within six months, provide at least A$1 billion in financing to projects that are expected to “generate end product for delivery to buyers in the United States and Australia”.

This financing can be delivered through several different mechanisms. The Alcoa-Sojitz Gallim Recovery Project, located in Wagerup Western Australia, will receive US$200 million in concessional equity financing, with the Australian and US governments committing to purchase a portion of the produced gallium. The US is also making an equity investment in the trilateral project with Japan.

A second project, the Arafura Nolans project in the Northern Territory, which includes a proposed mine and on-site processing facilities, will receive a US$100 million investment from the Australian federal government, which is in addition to significant funding already received from the Australian government.

Also flagged in the framework are measures that will accelerate, streamline or deregulate permitting timelines and processes for criterial minerals and rare earths mining, separation and processing. This will be welcome news for investors and developers and should alleviate one key concern relating to developing these projects in Australia: the complexity and long timeframes associated with Australia’s environment and planning approval processes for major projects. 

The August 2025 Productivity Roundtable identified these processes as a priority area for reform. Proposed environmental reforms in federal parliament will dictate how the proposed fast-tracking of permits and processes is facilitated. Those reforms will require negotiations in the senate and are expected to be scrutinised by both environmental groups calling for increased protection of environmental values and industry seeking more efficient and transparent decision making. Some state jurisdictions have already introduced reforms to support streamlined processes for resources and energy projects, such as Western Australia with the State Development Bill introduced last month.

From a regulatory perspective in Australia, this arrangement with the US is likely to mean that foreign investment in Australia’s critical minerals assets will continue to be heavily scrutinised by the Foreign Investment Review Board, with investments by foreign investors from strategic defence partners possibly fast-tracked, and investments from other jurisdictions, particularly China, facing more detailed review. 

Co-written by Florence Riviere of Pinsent Masons.