Australia and other nations are working to expand their production of rare earth elements, despite challenges and China's current dominance, which may lessen in the next decade.

Australia announced they are supporting a new major rare-earth project by giving a miner named Arafura an 840 million Australian dollar loan to build a mine and processing plant in the Northern Territory. Iluka invested AU$1.25 billion two years ago to build a rare-earth processing plant in Western Australia. The loan comes mainly from the government's Critical Minerals Facility.

Australia is investing in expanding its production and supply of clean energy materials, building on its history of exporting raw minerals. The country has worked with the United States on a major project to reduce reliance on China for important minerals.

Critics argue that Australia may struggle to compete with cheaper producers in Asia and Africa due to this policy. The overabundance of nickel, lithium, and cobalt, three battery metals, has already negatively impacted development plans and existing projects.

The price of rare-earth elements, 17 metals used in making permanent magnets for things like wind turbines and electric vehicles, has decreased recently. Australian company Lynas, the only major supplier of rare earth materials outside China, announced a 74% drop in its earnings for the half-year period in February. Despite this setback, Lynas maintains optimism over long-term demand growth.

China supplies about 60% of the world's rare earth minerals, but this is expected to decrease to 50% by 2035 as other mines expand and new ones open, says Wood Mackenzie analyst Ross Embleton.

In this stage of refinement, China holds 85% of the global market share. Embleton mentioned that despite expected decreases, new projects still face challenges like cost, funding, technical difficulties, and inflation. He stated that a lack of downstream consumers who can turn rare-earth elements into finished products is another barrier to developing supply chains outside of China.