Expect big handouts for mining companies to continue, experts say, as foreign investment, the renewables industry and the Australian government chase Chinese dominance in rare earth minerals production.

The Albanese government announced an $840 million package of loans and grants for mining company Arafura’s rare earths mine and refinery last week to boost the extraction of minerals integral to the production of wind turbines and electric vehicle motors.

The involvement of mining magnate Gina Rinehart, however, turned some heads.

If only Gina Rinehart was rich enough to risk her own money on her mining companies…just days after the AFR ran a story by the new head of the Productivity Commission warning against subsidies for batteries. Sigh #auspol #climate pic.twitter.com/FVB8gIYECN

— Richard Denniss (@RDNS_TAI) March 14, 2024

Rinehart, who owns roughly 10 per cent of Arafura after investing $60 million into the company in late 2022, has made her fortune from fossil fuels and has called climate change “propaganda”.

Prime Minister Anthony Albanese said the project was an important step in turning Australia into a renewable superpower.

“When it comes to the technology that the world is investing in to cut pollution, whether it’s electric vehicles or wind turbines, rare earths are absolutely essential,” he said.

“Extracting and exporting resources has always been a great strength of the Australian economy.”

The company has received foreign investment from South Korean car manufacturer Hyundai and American Electric.

A valuable investment?

Dr Liam Wagner, associate professor in sustainable energy systems at Curtin University, said rare earth minerals extraction could be the next mining boom for Australia.

“Rare earth metals, in particular ones that are going to be used for magnets in wind turbines and electric motors, are of critical importance to our future,” he said.

“We’ll see more projects in the Northern Territory, WA and Queensland in particular.”

He said most of the world’s supply of these minerals currently comes out of China.

“It’s important that it’s owned by Australian interests in the majority, to maintain our sovereign capability,” Wagner said.

“The metals that are mined in the Democratic Republic of Congo, American companies have been pulling out and the Chinese government has started to take these mines over.”

China produces more than two-thirds of the total rare earth minerals each year, with the United States in a distant second place.

China leads the world in rare earth mineral extraction. Photo: Getty

Australia has the fourth highest production, also behind Myanmar, but Wagner said the country is “exceptionally lucky”.

“We have the second- or third-largest supply of copper and one of the largest reserves of lithium,” he said.

“We aren’t going to start producing many mobile phones or computers here, but we may very well be able to start a car industry again, particularly in EVs.”

Nolans project

Nolans project, located 135 kilometres from Alice Springs, will also support the processing of rare earth minerals on site and is aiming to start production in 2025.

Arafura’s shares skyrocketed by 59 per cent when the deal was announced, after steadily decreasing for years, which sparked further criticism of the Australian government and Rinehart’s involvement as the biggest investor.

Tweet from @bentbananabooks

Wagner said the mined and processed resources will be an important part of the transition to net-zero emissions.

“If we do electrify everything and get rid of gas and oil, we’re going to need more of these rare earths to be able to sustain our economy,” he said.

“It really is critically important that we do it and this is a positive move.”