The first will be National Offtake Agreements under which the government, through voluntary contractual arrangements, will acquire agreed volumes of the minerals from commercial projects.
The second element will be physical stockpiles of specific critical minerals deemed necessary for national security.
Alternatively, it could establish an option to buy the minerals at an agreed price and thus hold security over them through the strategic reserve.
To help accelerate the production of the minerals, the government will boost the Critical Minerals Facility, first established by the Morrison government, by another $1 billion. The facility helps with upfront capital costs of new projects developed by the private sector and international partners.
Critical minerals such as lithium, cobalt, manganese and rare earth elements are used in everything from defence systems and batteries to smartphones and medical devices. China controls about 70 per cent of global output, with national security officials concerned Beijing could cut off supply at any time.
“In a time of global uncertainty, Australia will be stronger and safer by developing our critical national assets to create economic opportunity and resilience,” Albanese said in a statement. “To leverage our natural resources is in our national interest.
“The strategic reserve will mean government has the power to purchase, own and sell critical minerals found here in Australia.
“It will mean we can deal with trade and market disruptions from a position of strength. Because Australia will be able to call on an internationally-significant quantity of resources in global demand.”
The reserve will also play directly into the election campaign given the Coalition has vowed to scrap a separate Labor initiative to offer miners production tax credits to encourage the extraction and processing of critical minerals and green hydrogen.
The Coalition is banking a budget saving of $14 billion by not proceeding with the tax credits “because they are not going to work”. About half the tax credits are for critical minerals extraction.
Labor is at a high watermark in WA and needs to hold all its seats there to stave off being reduced to minority government. It has portrayed the Coalition’s disdain for the tax credits as anti-WA.
“The strategic reserve, combined with production tax credits and the expansion of the critical minerals facility, shows the Albanese government is taking the development of an Australian critical minerals industry seriously,” said Resources Minister Madeleine King. “And that means more investment and more jobs for Western Australia.”
One government source, speaking on condition of anonymity, said the strategic reserve would undoubtedlybecome part of future tariff negotiations with the Trump administrat
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