G7 Pushes for Diversified Critical Mineral Supply; Expert: Australia Faces Major Opportunity

(CNA, Reporter Chiu Te-chen, Sydney, June 22) The Group of Seven (G7) has declared its intention to "significantly" reduce reliance on critical mineral supplies from a "single country," drawing attention to Australia's importance. Australian experts state that the G7's goal undoubtedly presents a major opportunity for Australia's critical minerals industry; however, the Australian industry must expand into the midstream and downstream of the supply chain to potentially drive supply diversification alongside the G7.

G7 leaders issued a statement on the 17th, stating, "By 2030, reduce reliance on any single supplier for rare earths and permanent magnets to below 60% for G7 member states and their partner countries." Following the announcement, the issue of the G7's commitment to breaking away from reliance on China's critical mineral supply, and the potential for Australia to grow, has become a focal point of international media attention.

Discovery Alert, a media outlet specializing in Australian mining investment analysis, published an article on the 21st pointing out that although China was not mentioned in the G7 statement, the G7's promotion of a "single-supplier concentration cap" is precisely aimed at China's current monopoly on global critical mineral product supply and its use of state power to interfere with market price mechanisms.

Vlado Vivoda, an honorary research fellow at the Sustainable Minerals Institute at the University of Queensland, responded to CNA's questions via email, stating that the G7's goal of reducing reliance on critical mineral products from a "single country" offers a significant opportunity for Australia; however, Australia's critical minerals industry must expand into the midstream and downstream to seize this opportunity.

While Australia's critical minerals industry is very strong in upstream areas such as mining and early-stage processing, Vivoda pointed out that this is far from sufficient to help the G7 build the diversified supply chain it needs. He said, "The more important strategic question is whether the Australian industry can expand into processes such as the separation of individual rare earth elements, refining, the production of metals and alloys, magnet manufacturing, and the creation of specialty products required by industry; that is, the midstream and downstream segments of the supply chain."

Vivoda cautioned that to expand into the midstream and downstream segments, Australia and partner countries need support in areas such as finance, management, and government policy. He stated that the issue is not just about how much ore is extracted, but more importantly, whether trusted partner countries can cooperate in areas such as financing, offtake agreements, processing capacity, standards, inventory, defense needs, and industrial policy. Otherwise, "diversification will just be a slogan, not a real supply chain."

Vivoda further warned that for the G7 and partner countries like Australia to break away from reliance on China, practical actions are needed in addition to political will. He said that China's advantage is not limited to rare earth mining; its true strength lies in the midstream and downstream of the rare earth industry chain. China possesses advantages in scale, technology, low-cost processing, established customer relationships, and the ability to influence prices. Therefore, building an industry chain that can replace China will require significant costs. "Governments must be prepared to pay, otherwise the 60% target will be just empty talk."

Vivoda believes that relying solely on existing market competition mechanisms will make it difficult to establish a diversified rare earth supply chain. He said, "China's dominant position today was not achieved overnight; China's industrial strategy, economies of scale, the advantage of environmental cost arbitrage through differences in environmental regulations, pricing power, and strong government support are all important factors that have led to China's dominant position."

Vivoda emphasized that to build a diversified supply chain, allies and partner countries need to develop coordinated industrial strategies across the entire value chain, from mining and processing to production and final consumption. He said, "Australia can play an important role, but only if Australia is seen as part of a broader allied industrial ecosystem, not just a quarry supplying critical minerals to other countries." (Editor: Tien Rui-hua) 1150622)