The surge of US and European investments in Australia's rare earths: Mining companies' stock prices rise by 900%, deep processing capabilities questioned

Australia's rare earth industry is experiencing an unprecedented wave of international investment. Following the signing of a key mineral supply agreement between the U.S. and Australia, several mineral projects in Australia have attracted intense attention from American and European capital, leading to soaring stock prices. In a moment, Australia has been pushed to the center stage of global rare earth competition. However, the Australian rare earth industry, under the spotlight of capital, also reveals many competitive concerns. Industry experts told Global Times reporters that some Western countries want to reshape the global rare earth supply chain by investing in Australia's key mineral resources, but to achieve this goal, Australia still needs to spend a lot of time improving various industrial elements.

Australia's "Rare Earth Darling" Stock Prices Rise 3 Times

Since the beginning of this year, the stock price of Lynas Corporation, Australia's largest rare earth industry company, has taken a "roller coaster ride"—rising from less than $5 at the beginning of the year to three times that by mid-October, before quickly sliding back to around $10. According to a report by The West Australian on the 26th, Lynas executives stated at the investor annual meeting that despite recent power outages in Western Australia, the company is accelerating the development of new opportunities and striving to become a leader in the global market in the future. The report suggests that Lynas has become Australia's "rare earth darling."

According to a report from CNBC on October 21, the U.S. and Australia signed an agreement aimed at strengthening the supply of rare earths and other critical minerals, after which Lynas announced a $8.5 billion U.S. mineral deal. The report cites analysis from the U.S. think tank Center for Strategic and International Studies, stating that Australia is expected to become the most important partner for the U.S. in countering China's dominance in the rare earth sector, noting that Australia attracted $64 million in mineral exploration investment in 2024, accounting for 45% of the global total. Against this backdrop, Lynas's stock price has reached new heights.

Entering 2025, international funds continue to bet on Australian rare earth mining projects. According to a report by the Financial Times on the 25th, Australian mining company Sunrise Energy Metals plans to build a scandium mine 50 kilometers west of Sydney, which is expected to start production in 2028. The company raised $30 million last week to initiate preliminary activities for the mine's construction. The downstream processing of this mineral is expected to take place in the U.S., and Sunrise Energy Metals is currently in talks with potential partners. This is one of the first projects launched in Australia following the U.S.-Australia agreement to increase rare earth supply. The agreement also stipulates that both countries commit to investing $1 billion each to produce rare earth projects for buyers in the U.S. and Australia.

The report specifically mentions that Sunrise Energy Metals' stock price has surged nearly 900% in the past six months, and the company signed an agreement with U.S. arms manufacturer Lockheed Martin in October to supply 25% of its scandium production.

The Financial Times also stated that Australia has abundant mineral resources and a relatively mature mining industry, making it an important avenue for Western countries to diversify their supply of critical metals. Friedland, founder of Canadian mining company Ivanhoe Mines, stated that Australia has a bright future in scandium mining, saying, "No mine has ever allowed you to extract it as easily as in Australia." According to Reuters, Australia hopes to have more allies join its critical minerals reserve program. Australian Trade Minister Farrell stated in early November that since signing a mineral supply agreement with the United States, allies including the European Union have shown increasing interest in Australia's strategic critical minerals reserves. The report quoted Farrell as saying, "Given the mineral cooperation reached between Australia and the United States, I believe Europe, Japan, South Korea, and Singapore are becoming increasingly interested in what we are doing in this area, especially the Europeans, who do not want to miss any opportunities." The report noted that the EU, Japan, South Korea, and Singapore have expressed interest in Australia's mineral reserves, and Australia is also trying to leverage its "strategic importance" in the energy sector.

Attracting Investment from the EU, South Korea, and India

Australia's Proactiveinvestors website reported that the EU is stepping up efforts to secure critical minerals, announcing plans to directly invest in some Australian projects to ensure the supply of key raw materials such as lithium and rare earths. Maros Sefcovic, the EU Commissioner responsible for trade and economic security, confirmed during a visit to Australia in November that the EU has completed a preliminary screening of interested projects and will soon announce a shortlist of Australian mining and processing companies for investment through equity, joint ventures, or long-term purchase agreements. This marks a shift for the group from strategy to execution.

The report also stated that the rare earth and other critical mineral supply agreement signed between the United States and Australia has changed the investment environment for Australian miners. Under the agreement, selected projects in mining, refining, and processing will receive support through financing guarantees, government backing, streamlined approval processes, and strategic procurement. Key projects in rare earths and semiconductor-grade materials have already attracted attention. This means that Australian critical mineral developers currently have a triple strategic advantage: support from Washington, endorsement from the domestic government, and direct access to European capital.

For Australia's listed critical mineral developers and explorers, projects that meet EU standards in terms of scale, traceability, environmental and social governance, and downstream integration are more likely to attract greater attention. Projects with processing or value-added expansion plans may be in a more favorable position.

South Korea is also accelerating its investment in Australian resources. Australia's Strategist magazine website reported that under the comprehensive strategic partnership framework established in 2021, Australia and South Korea have begun collaboration in the critical minerals sector. In September 2023, Australia's Export Finance Agency signed a memorandum of understanding with the Korea Export-Import Bank to strengthen cooperation in critical minerals and renewable energy. Australia's Wesfarmers Chemicals, Energy & Fertilizers signed an agreement in February 2024 to supply up to 85,000 tons of lithium concentrate to South Korean battery company LG Energy Solution. Similarly, in a joint venture project, Australia's Pilbara Minerals and South Korea's POSCO announced the completion of a lithium hydroxide plant in South Korea According to reports, in June this year, Australian Prime Minister Anthony Albanese and South Korean President Lee Jae-myung reaffirmed their commitment to deepening cooperation in defense, weapons manufacturing, and critical minerals. On October 9, Australia, South Korea, and Tanzania jointly held a groundbreaking ceremony for the Mahenge graphite project in Tanzania. The project is led by Australian Black Rock Mining, with participation from POSCO and the Tanzanian government.

Other investment partners also include India. According to the Economic Times of India, Australia's High Commissioner to India, Philip Green, stated that Australia accounts for more than half of global lithium production, while India is moving towards becoming a major producer of batteries and electric vehicles and is expected to become a major importer of lithium globally. In recent years, cooperation between India and Australia has identified five large lithium-cobalt projects for Indian private enterprises to explore equity investment or purchase agreements.

Regional Mineral Advantages Do Not Equate to Industrial Chain Advantages

Chen Hong, director of the Australia Research Center at East China Normal University, told Global Times reporters that since the second half of this year, a large amount of Western capital from the U.S. and Europe has flowed into Australia's rare earth sector. "We have noticed that for more than a decade, Australia's rare earth resources have appeared 'neglected' in the international investment market. It is only recently, driven by some geopolitical factors, that capital has begun to flow in. However, this capital allocation, which does not stem from commercial or market forces, has actually exceeded the commercial value of Australia's rare earths themselves." Chen Hong analyzed that apart from the Lynas project, most of Australia's rare earth mines are currently in the exploration stage, belonging to the early stages of industrial chain construction, and are far from generating cash flow.

"Australia has relatively rich rare earth mineral resources, but its capabilities in separation and smelting are still lacking, which means that the capital flowing into Australia is still far from obtaining commercial investment value and is even filled with many uncertainties and risks." Chen Hong believes that the capital enthusiasm has clearly exceeded the value of the rare earth mines themselves. "The U.S. and Europe are betting on Australia's rare earth mines, but this politically driven industrial impulse does not conform to the laws of industrial development."

Australia is also working to strengthen its domestic rare earth industrial chain. Before the parliamentary elections in May this year, Australian Prime Minister Albanese announced a $78 million critical minerals reserve plan aimed at supporting the development of the domestic mining industry, focusing on improving processing technology. According to Al Jazeera, during Biden's presidency, the U.S. and Australia established a "Critical Minerals Working Group." However, after President Trump began his second term, he imposed a 10% comprehensive tariff on most export goods from Australia, leading to a period of tension in economic relations between the U.S. and Australia.

"Currently, there is an ally relationship between the U.S. and Europe and Australia, and funding is not lacking. Australia's rare earth reserves are also quite considerable. Although these conditions seem to be very favorable for Australia, in reality, turning mineral raw materials into products needed for industry is fraught with difficulties." Chen Hong further analyzed that what the U.S. and Europe mainly need are heavy rare earths, but most of Australia's rare earths are light rare earths, meaning that the supply and demand cannot fully match. In this important dimension, the U.S. and Europe cannot expect Australia to replace China; moreover, in the processes of separation, smelting, and manufacturing of rare earths, China holds an absolute dominant position globally, while Australia excels in mineral extraction, and its entire industrial chain's mid-to-lower reaches still need to be filled Chen Hong stated: "Rare earth mining requires support from various aspects such as environmental protection, labor force, and infrastructure, which cannot be achieved overnight. Therefore, the mineral advantages of a region do not equate to advantages in the industrial chain."

A report by the Australian Broadcasting Corporation this month also analyzed that, unlike oil, the supply of some key rare earths is not about "quantity" but about "quality"—the key value of rare earths lies not in the amount mined, but in how they are refined into oxides and then sent to smelters to be processed into metals. Currently, 90% of the world's rare earth refining work is done in China, while the United States is striving to achieve this independently.

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