Moving into 2026, Australia’s critical minerals sector is set for significant change. As global demand grows, governments are adopting more strategic policies and controls to secure access to these resources. The October 2025 signing of The United States-Australia Framework for Securing of Supply in the Mining and Processing of Critical Minerals and Rare Earths’ (Framework) marked a pivotal moment for the critical minerals industry, establishing a coordinated effort to secure supply chains for rare earths and other strategic minerals mainly in response to China’s dominance in this sector. The agreement commits the two governments to over US$3 billion in joint investment, supported by over US$2.2 billion in US Export-Import (EXIM) Bank financing – demonstrating the growing strategic importance of resources of this kind.
Chinese Critical Mineral Dominance
Critical minerals, particularly those used in permanent magnets, are essential for national security and the energy transition. Magnet critical minerals collectively account for more than 80% of the value of the global rare earths, and China currently controls approximately 90% of global HREE processing and magnets.
Throughout 2025, China continued to demonstrate its dominance over critical minerals through policy intervention. In April and October 2025, China imposed new critical minerals controls, adding five new elements to its restricted list and extending extraterritorial jurisdiction to products manufactured abroad using Chinese technologies. Although these interventions have been partially suspended for one year, they highlight China’s enduring ability to leverage global critical minerals supply chains.
These shifting market dynamics are creating significant uncertainty for global manufacturers and increasing pressure on Australia to advance its own critical mineral strategic response, up and down the supply chain.
Australia’s Critical Mineral Strategic Reserve
This growing pressure culminated in the release of the Association of Mining and Exploration Companies (AMEC) government-commissioned design paper (AMEC Design Paper) in December 2025 proposing a Critical Minerals Strategic Reserve (CMSR). The AMEC Design Paper recommended a Rare Earths Production Scheme (REPS) based on Contracts for Difference (CfD) with a price collar to stabilise revenues for both light and heavy critical mineral projects. Instead of taking a conventional stockpiling approach, the CMSR attempts to leverage geological advantages utilising financial mechanisms and offtake support mechanisms. The REPS model focuses on the four core magnet critical minerals, being neodymium, praseodymium, dysprosium and terbium. The goal is to restore project bankability in a market shaped by China’s pricing power while limiting downside fiscal risk for taxpayers.
Federal Government Update – January 2026
Momentum has continued into early 2026. On 12 January 2026, the Federal Government released its first formal update on the CMSR since the April 2025 election commitment. The announcement outlined that the CMSR will initially target critical minerals, as well as gallium and antimony, and is backed by $1.2 billion in the 2025-26 Budget, including $1 billion in transaction capacity through the expanded Critical Minerals Facility. A further $185 million has been allocated for selective stockpiling and implementation, with the CMSR set to be operational in the second half of 2026.
The Government emphasised that the CMSR will help projects “weather global economic uncertainty”, particularly in relation to commercial and construction risks that have historically constrained critical mineral developments. Treasurer Jim Chalmers noted that “ensuring we have a reliable reserve of these critical resources will strengthen supply chains and help to stabilise critical minerals markets”, highlighting the strategic intent behind the CMSR.
While the REPS under AMEC’s design paper concentrated specifically on magnet critical minerals, the Government’s January 2026 update signals a broader CMSR remit, initially incorporating gallium and antimony. This shift suggests the Government is leaning toward a more diversified strategic capability for the CMSR.
To support delivery, the Government will introduce legislation in 2026 to expand Export Finance Australia’s (EFA) powers so it can administer CMSR transactions in partnership with the Department of Industry, Science and Resources. While this approach avoids the delays of creating a new agency, questions remain about EFA’s resourcing and its capability to conduct complex commercial negotiations at scale.
Federal Government intervention – FIRB and lifelines
In addition to various policy announcements, the Federal Government is using other leavers to support and protect the critical minerals sector. Australia’s Foreign Investment Review Board (FIRB) policy has become a central gatekeeper for Chinese investment in the critical minerals sector, reflecting the Federal Government’s broader shift toward economic security and supply-chain resilience. Critical minerals are being treated as a national security concern, giving the Treasurer broad powers to scrutinise, condition or block transactions that may concentrate control of strategic assets or processing capacity in higher-risk jurisdictions.
Very public enforcement proceedings have been perused by the Government against Chinese investors. On 30 January 2026, Justice Perram of the Federal Court of Australia (Court) handed down a $14 million dollar penalty to foreign investor, Indian Ocean International Shipping and Service Company Ltd (Indian Ocean) and its sole director and shareholder, Ms Jing Tian. The penalties were issued due to a failure by Indian Ocean to comply with a FIRB disposal order in respect to shares in Northern Minerals a dysprosium and terbium project owner.
Alongside FIRB enforcement, the Federal Government has also provided substantial funding commitments for mineral smelters which struggle with financial viability in Australia. The most prominent example was the March 2026 $2 billion joint Commonwealth/Queensland package for Rio Tinto’s Boyne aluminium smelter in Gladstone, with Canberra contributing $1 billion to support the plant’s transition to renewable power and to secure operations through to at least 2040. The Federal Government also joined Queensland in a A$600 million support package for Glencore’s Mount Isa copper smelter and its Townsville refinery – assets viewed as critical to Australia’s copper value chain. In 2025, Canberra also participated in a $135 million rescue package for Nyrstar’s Port Pirie and Hobart smelters, aimed at keeping lead smelting capabilities operational.
These measures signal a decisive policy shift — from mineral smelters being treated solely as private industrial assets, to being nationally significant infrastructure warranting direct fiscal support where market conditions threaten closure.
Outlook for 2026
The year ahead will be important for operationalising Australia’s strategic minerals Framework. Legislation to enable the CMSR is expected early in 2026, with operations targeted for the second half of the year. While the Government has confirmed the CMSR will secure rights to minerals produced in Australia and on-sell those rights to meet demand, the specific financial mechanisms required to implement this model remain under consideration. As emphasised in the AMEC Design Paper, execution is now Australia’s greatest challenge.
As a result of the Framework, several US-Australia deals and partnerships have emerged. Notable developments include:
- Alcoa-Sojitz Gallium Recovery Project – Sojitz Corporation and Japan Organization for Metals and Energy Security (JOGMEC) have formed Japan Australia Gallium Associates Pty Ltd (JAGA), which has entered into a joint development agreement with Alcoa of Australia Limited to progress gallium recovery.
- Arafura’s Nolans Project – Backed by the Framework, the Australian Government approved a US$100 million equity investment in Arafura Rare Earths’ Nolans project in the Northern Territory in late 2025.
- Lynas Rare Earths’ partnership with Noveon Magnetics – Lynas Rare Earths and Noveon Magnetics have signed a memorandum of understanding to build a scalable US supply chain for rare earth permanent magnets, with Lynas supplying both light and heavy rare earth materials.
- Yangibana (the Wyloo and Hastings joint venture) – Hastings Technology Metals and joint venture partner Wyloo Gascoyne have reached an agreement with Canadian processor Ucore Rare Metals to explore supplying and processing Yangibana rare earths in the US.
- Browns Range Project (Northern Minerals) – Northern Minerals raised $60.5 million to advance its Browns Range project, supported by non-binding conditional letters from EFA and the US EXIM Bank for up to US$230 million in potential funding.
- Energy Fuels’ acquisition of ASM – US‑based Energy Fuels Inc. has agreed to acquire Australian Strategic Materials Limited in a deal valuing the company at $299 million.
These projects are positioned to scale materially from 2028. Australia is one of the world’s largest holders of critical minerals, ranking fourth globally, highlighting the importance of progressing these developments. Arafura’s Nolans Project alone, backed by approximately$230 million in equity subscriptions, is projected to produce around 4% of the world’s neodymium and praseodymium demand from 2032. Beyond critical minerals, allied investment in the Alcoa-Sojitz gallium recovery project, led by Australia, the United States and Japan, is expected to supply up to 10% of global gallium demand, demonstrating the broadening scope of strategic minerals collaboration.
As global supply chains diversify and new critical mineral processing capacity begins to emerge outside China, 2026 offers Australia an opportunity to position itself for the role it intends to play in the rapidly shifting resources landscape. The decisions made this year will shape not only project viability, but Australia’s credibility as a long‑term, reliable contributor to the critical minerals sector.