Critical minerals need insulation from China’s market manipulation – by Angus Barker (Australian Strategic Policy Institution – May 21, 2024)

Investors can handle lots of different risks. They can price risks in construction, interest rates, weather and, with hedging, price movements in product markets. But the one risk they can’t price is political risk, the chance of some government action ruining profits. You can’t hedge against it.

How should we respond when, as the chief executive of critical-minerals company Iluka said this month, when accusing China of rigging rare earths prices, ‘monopolistic production, combined with interference in pricing … is resulting in market failure’? How should we respond when price risk is political risk?

Australia needs to respond with government action—for example, in financing projects, supporting the construction of shared facilities and setting price floors.

These challenges were addressed at ASPI’s recent Darwin Dialogue on Critical Minerals, attended by government representatives from the United States, Japan, South Korea, the European Union and Australia and by key Australian critical-minerals firms such as Iluka, Australian Rare Earths and Arafura.

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