Federal Resources Minister Madeleine King ‘certainly wouldn't' rule out equity investment in rare earth miners

West Australian

5 hours ago

Federal Resources Minister Madeleine King has suggested Australia could replicate the US government's move to grab a big shareholding in a rare earths company.
The US Department of Defense last month struck a landmark deal with the Gina Rinehart-backed MP Materials to acquire a 15 per cent stake in the Las Vegas-headquartered company and buy some of its rare earth element products.
Uncle Sam took the extraordinary equity investment step — believed to be the first of its kind since World War II — as part of its push to break China's stranglehold on the supply chain for rare earth elements.
These elements are used in the magnets that power electronic products like precision-guided missiles, MRI machines, smartphones and electric vehicles.
Speaking at Diggers & Dealers on Tuesday, Minister King said the Albanese Government 'certainly wouldn't' rule out following in the footsteps of the US by investing in an Australian-based producer of rare earths.
'I would say that the government special investment vehicles, a number of them, have been enabled, through changes in legislation, to take equity stakes for a number of years,' she said.
'It's a high bar to get over, (but) you certainly wouldn't rule it out.'
Ms King said the Federal Government would only make an investment if there was confidence the amount spent would be repaid in full.
'Because people would quite rightly comment, why should the Australian taxpayer fund minerals processing?'
Lynas Rare Earths, Iluka Resources, Australian Strategic Materials and Arafura Rare Earths could be among those vying for the Federal investment.
As part of the US and MP partnership, the DOD has agreed to pay a minimum of $US110 per kilogram for MP's neodymium and praseodymium for a decade.
The US price floor comes amid strong suggestions China has been purposely depressing the price of NdPr to about half of the $US110/kg floor to put the Western World's producers out of business.
Minister King on Tuesday said Australia would also consider setting a rare earths price floor in offtake agreements that could feed into a $1.2 billion critical minerals strategic reserve announced in April.
'Pricing certainty means companies and investors are less exposed to volatile markets and prices, which are opaque and prone to manipulation,' she said.
'Mechanisms for an appropriate price floor are under active consideration. The focus will be on creating national offtake agreements.
'Our critical minerals strategic reserve aims to play a role in providing price certainty for emerging critical minerals projects, which helps to de-risk and crowd-in private sector investment.'
The $1.2b strategic reserve is set to be focused on rare earths.
Lynas, which had originally been a critic of the stockpile, appears to have softened its stance in recent days and Minister King on Tuesday said the Amanda Lacaze-led company was 'participating' in discussions.
One of Australia's key players in the rare earths industry suggested that Australia should follow the US lead on the price floor.
'If you wanted to pick a price that brings in investors, that has upside because it's still below the incentive price, you would say $(US)110 per kilogram (for NdPr) is about right,' Arafura chief executive Darryl Cuzzubbo said at Diggers & Dealers on Tuesday.
Mr Cuzzubbo said the 'incentive price' to develop new rare earth projects was a neodymium and praseodymium price of between $130/kg and $160/kg.
Perth-based Arafura, which is developing the $1.9b Nolans project in the Northern Territory, said a $US100/kg NdPr has been baked into the business case for Nolans.