Miners have welcomed the government's $1.2 billion plan to buy critical minerals to shore up supplies for defence and clean energy technologies.
Antimony, gallium and rare earth metals were unveiled by Resources Minister Madeleine King as the first elements to be included in a long-promised strategic reserve aimed at countering Chinese dominance in high-tech supply chains.
The critical minerals strategic reserve is designed to break Beijing's grip on the supply of the metals needed for defence equipment such as fighter jets, and clean energy technology.
China, which has a stranglehold on supplies for many critical minerals and the technologies they produce, has flexed its economic muscle by imposing export restrictions on rivals in recent years.
Resources Minister Madeleine King said the stockpile would shore up hi-tech manufacturing supply chains and help stabilise critical minerals markets, encouraging miners to invest in production.
Legislation set to be introduced this year will give the government powers to strike off-take agreements with producers, among other financial instruments like contracts for difference and $185 million for stockpiling select minerals.
Essentially, the government would enter into purchasing agreements with miners so even if prices tank, revenue is guaranteed.
Miners have previously backed a floor price for critical minerals to provide certainty to the volatile market, after the US government's deal with MP Materials to set a minimum price of $US110 per kg for rare earth elements neodymium and praseodymium.
If prices rise above the agreed level, the government receives a windfall revenue from on-selling the minerals at a higher cost.
"We can encourage more investment, create stability in the market, but also as prices rise, and we think they will, that there's the opportunity for the Australian taxpayer to get the upside of that price rise as well," Ms King said.
The first minerals added to the stockpile highlight the focus on military and renewable energy technology.
Gallium is used to produce advanced semiconductors, LEDs, solar panels and communications equipment, while antimony is a key ingredient in batteries, night-vision equipment, fire retardants and, increasingly, solar panels.
Rare earths are used to make magnets that are essential for technologies like fighter jets and MRI machines.
Australia holds one of the world's largest reserves of rare earths and ASX-listed Lynas Rare Earths is the world’s only significant producer of separated rare earth materials outside of China.
The announcement coincided with Treasurer Jim Chalmers visiting Washington DC, where he will discuss critical minerals at meetings with finance ministers from the G7 nations, as well as India, Mexico and South Korea.
The world needs critical minerals and Australia has plenty of them, Dr Chalmers said.
Lynas shares were up five per cent by Monday afternoon and fellow rare earths player Arafura was 6.8 per cent higher.
Shares in ASX-listed antimony miner Larvotto Resources gained 5.5 per cent.
Managing director Ron Heeks welcomed the announcement, even though Larvotto's mine development near Armidale in NSW was comfortably economic with antimony prices at current levels.
"We see this as a positive for AUKUS and for Australia," he told AAP.
The strategic reserve was an important tool in the broader kit of productivity reforms that can deliver a more internationally competitive mining industry, Minerals Council chief executive Tania Constable said.
Canberra and Washington struck a $13 billion rare earths deal in 2025 for a pipeline of projects to expand mining and processing in Australia.
The two countries committed to investing at least $1.5 billion each to develop critical minerals projects in the next six months.
