The Hinrich Foundation Trade Podcast
Why rare earths are a critical test of redrawing supply chains
Published 22 July 2025
In this special edition of the Hinrich Foundation’s podcast on global trade, the Association of Foreign Press Correspondents-USA sits down with Naoise McDonagh, Senior Lecturer, Edith Cowan University, to assess how the race to reduce dependence on China in rare earths is testing new supply chains and down-streaming the industry in the global economy.
Tune in to this special episode hosted by the US Association of Foreign Press Correspondents:
Rare earths are vital for advanced manufacturing, powering industries like electric vehicles, defence, and robotics. China dominates their supply, controlling 90% of processed rare earths, which gives it significant geopolitical leverage. Rare earths are classified as critical minerals due to their strategic importance and supply chain vulnerabilities. While countries like the US and Australia are seeking alternatives, China's processing monopoly and price volatility complicate efforts. Australia, with projects like Lynas, aims to reduce this dependency, but global economics poses ongoing challenges. McDonagh concludes that the rare earth market is shifting towards strategic, state-backed production partnerships, particularly with allied nations.
Tune into this podcast as Naoise McDonagh, Senior Lecturer, Edith Cowan University, joins the Association of Foreign Press Correspondents-USA to break down the crucial role of rare earth minerals and how Australia is laying the grounds to position itself as an alternative supplier to China in this sector. The podcast follows up on McDonagh’s recent paper for the Hinrich Foundation, "Australia’s rare earths lie between economic security and liberal markets."
Here is an excerpt from their conversation:
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Adam Creighton: |
Is there a scramble in the US, Australia, and Japan to mine rare earths at home? |
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Naoise McDonagh: |
Currently there is, because this year has been so disruptive and China played its card so well, but this has been building up for a long period of time. China has been utilizing its strategic control over rare earths for a long period of time, not just cutting off Japan, which it did twice. But also, what it would do – and this is typical monopoly strategy, private firms actually perfected these techniques during the 20th century. So, if you're a major monopoly power - you’re dominating the market, you've built up a lot of capital, and you have funds for rainy days. If you have a new entrant trying to enter the market, even if they have a better product, they normally won't have the long-term funding in place and will be more vulnerable. And you can just crash your price. You can take a loss for one year, two years if you must, because you've got your big economic mode to protect you. And so, you drive the new entrants out of the market, or if they enter, you kill them within a year. And then over time what happens is that investors say, you know what? We're not even trying this market because we know what will happen. |
Tune into the Hinrich Foundation’s podcast series for insights on international trade.
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Author
Naoise McDonagh
Naoise publishes original research on international business and trade issues, including how domestic regulation, international trade agreements and geopolitics impact the international business environment. In addition, he teaches courses on international business at the undergraduate and postgraduate levels in ECU's School of Business and Law.
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