Strategic Minerals Reserve Backs Security, Energy Shift
The Chamber of Minerals and Energy WA (CME) acknowledges the Albanese Government’s commitment to establishing a Strategic Critical Minerals Reserve if re-elected on May 3.
Under the proposal, the Australian Government would offer to enter into voluntary offtake agreements with producers of select critical minerals, including rare earths, and in some cases stockpile materials for strategic purposes.
The existing Critical Minerals Facility – which offers financing to projects that are aligned with the national Critical Minerals Strategy – would be boosted by $1 billion to fund the new measures.
A task force will be created to consult and finalise the scope and design of the strategic reserve, which is expected to be operational in the second half of 2026
CME Chief Executive Officer Rebecca Tomkinson said the proposal was clear recognition of the importance of Western Australia’s critical minerals.
“Australia holds the world’s third largest known rare earth reserves but currently accounts for just three per cent of global production,” Ms Tomkinson said.
“Recent trade and geopolitical disruptions present a golden opportunity for Australia to attract the significant investment required to unlock our world-class critical minerals endowment.
“Like other critical minerals, the market for rare earths is thin, opaque and subject to unpredictable price swings, which has acted as a major barrier to getting projects off the ground.
“Federal Labor’s plan to offer voluntary offtake agreements that allow producers to lock-in stable and predictable revenue may assist in bringing projects to market by enhancing their attractiveness to investors.
“However, it is critical the offtake agreements offer a fair price reflective of Australia’s high ESG standards.
“It will also be important proposed settings are not finalised without close consultation with the industry to ensure the mechanism meets its objectives.”
While today’s announcement focused on a subset of strategic materials, the initiative would supplement existing measures to support Australia’s critical minerals industry, including the ability for the Commonwealth to make equity investments under the Critical Minerals Facility and National Reconstruction Fund.
Ms Tomkinson welcomed the intent of the Strategic Critical Minerals Reserve but cautioned WA would still struggle to compete with international competitors without an ongoing focus on investment fundamentals.
“Getting the basics right remains just as vital as ever, both to sustain existing industry and to capture new investment,” Ms Tomkinson said.
“Extracting and processing critical minerals such as rare earths is energy intensive. For projects to stack up, electricity costs will need to retreat from their recent record highs.
“We also need much faster project assessments and continue to call for the unwinding of industrial relations changes that have broken the link between productivity gains and wages.”
The International Energy Agency forecasts demand for critical minerals – including rare earths – could quadruple by 2040 as part of global efforts to decarbonise.
Rare earths elements are an essential ingredient in the magnets used in wind turbines and electric vehicle motors, as well as for a wide range of specialist medical equipment and military hardware including fighter jets and submarines.
https://www.cmewa.com.au/media-release/articles/strategic-critical-minerals-reserve-to-support-investment-in-commodities-vital-to-national-security-and-energy-transition/