Perspectives
This article is part of a series on how Macquarie is working with governments, clients and other partners to strengthen sovereign resilience and support nations around the world in building strategic autonomy.
Article highlights:
28 January 2026
In 1917, the US drew up the first ever list of critical minerals. A direct response to its entry into World War One, which had disrupted supply chains, the US Geological Survey was tasked with sourcing five key minerals – tin, nickel, platinum, nitrates and potash – needed for military equipment, domestic manufacturing and as agricultural fertiliser.1
Fast forward to more than a century later, and while the details are undoubtedly different, a familiar picture is emerging. The importance of critical minerals in our everyday lives – from the lithium batteries in smartphones and electric vehicles to the rare earth elements used in medical technologies – are once again in the spotlight amidst a backdrop of shifting geopolitics.
“Critical minerals are fundamental to the underlying infrastructure for a whole range of different industries,” says Russell Keating, Global Head of Critical Minerals & Energy at Macquarie Capital. “Whether that’s the transition from a fossil fuel economy to renewable energy or the increased focus on military and defence requirements, they’re strategically and industrially valuable, which is why they're front of mind for people around the world, both at a corporate and at a government level.”
Selected Mineral Demand
IEA Stated Policies Scenario, 2024 = 100
Source: IEA, Macquarie Macro Strategy2
However, the strategic value of today is inherently linked to concerns about the supply of tomorrow: the International Energy Agency (IEA) projections suggest that demand for minerals could increase significantly.3 With supply chains highly concentrated geographically, making them vulnerable to disruption, governments are looking to mitigate this risk by supporting sustainable diversification and exploring domestic production.
Boosted by a near constant presence in the news cycle, the focus on critical minerals might present as a contemporary issue, but the race for dominance in the sector has been playing out for decades.
In 1985, China recognised the strategic value of its abundant domestic reserves, introducing an export rebate system that provided a significant tax credit (up to 17 per cent), spurring on the rapid growth of its rare earths industry4 and kickstarting a game of catch up that continues to this day.
“China is the world's largest processor and consumer of virtually every mineral, with substantial upstream and downstream positions both domestically and globally, and that's strategically and industrially absolutely the right thing for China,” says Keating.
Source: Geoscience Australia
The world’s geological inventory is broadly dispersed, for instance; Ukraine contains Europe's largest uranium reserves,5 South Africa is home to 80 per cent of the world’s chromium,6 while Australia produces nearly half (46 per cent) of the world’s lithium ore.7 However, the decision by China to move fast and move early saw it outpace other nations, especially in the separation and refining stages for rare earths, where it currently represents approximately 90 per cent of global production, followed by Malaysia in second place due to the presence of Lynas Rare Earths.8
The capacity to separate has become especially key given high-purity materials are pivotal in advanced weaponry and electronics. Lynas Rare Earths, a Perth, Australia-based mining company with a mine and processing facility in Western Australia and a refining plant in Malaysia, is one of the world's lowest cost and largest producers of separated rare earth oxides outside of China, representing an existing (and immediate) supply chain alternative. In 2025, Macquarie Capital supported the company in raising $A750 million in equity to fund its growth and expand its supply chains.9
Heightened geopolitical tensions leading to pricing volatility and export restrictions – especially on minerals crucial to military applications, including gallium, germanium, and antimony – have made supply diversification a priority.
The US, Australia, and the European Union have begun stockpiling critical minerals, with Australia seeking to establish a Critical Minerals Strategic Reserve, the US creating the National Defence Stockpile, and the EU announcing the Critical Raw Materials Centre. In addition to strategic reserves, nations are entering bilateral and multilateral agreements, such as the US-Australia Critical Minerals Framework and the Mineral Security Partnership, while secure, sustainable and stable supply is also imperative to the AUKUS partnership’s success.
“We’re in the process of seeing bifurcated supply chains develop and that means a global contest for assets and development,” adds Keating. As the “global contest” begins in earnest, access to region-wide, on-the-ground expertise is increasingly valuable, with companies, governments, and investors seeking to navigate the changing landscape.
Keating says the global breadth of Macquarie Capital’s critical minerals and energy reach - across 11 resource critical locations globally10 - ensures it is already enabling the connection of capital and opportunity across continents. He points to the purchase by South Africa’s largest gold mining company, Harmony, of MAC Copper in Australia, in October 2025. Harmony’s largest acquisition to date, Macquarie Capital teams across Africa and Australia acted as exclusive financial advisers on the $US1.03 billion acquisition.
“Harmony sought to diversify beyond South Africa and gold, expanding strategically into copper,” says Keating. “Success hinged on aligning the ideal buyer with the perfect opportunity at precisely the right moment and achieving that demands a truly global team.”
Global expertise is also key to unpacking the complexities that stem from emerging and developing markets, in regions such as Latin America and Africa.11, 12 Both are mineral-rich but have been previously overlooked in global exploration investment of critical minerals due to complex governance frameworks and perceptions of political risk.
Navigating these complexities requires deep sector knowledge and a track record in international M&A, capital raising and advisory, says Keating, citing Macquarie Capital’s role in Paladin Energy’s acquisition of Fission Uranium Corp as an example. In 2024, Macquarie Capital acted as the sole financial adviser to Paladin on its $C1.14 billion acquisition of Fission, a high-grade uranium project located in Canada’s Athabasca Basin. Uranium was added back on to the US’ list of critical minerals in November, 2025.
Following the acquisition, Macquarie Capital raised $A300 million in September to progress the Patterson Lake South Project alongside the ongoing ramp-up activities of the Langer Heinrich Mine (LHM), Paladin’s flagship project in Namibia. LHM has a 17-year expected life and Paladin expects the operational ramp-up to be completed by the end of FY2026 with full mining and processing plant operations planned for FY2027.
“If you take a jurisdiction like Namibia in Africa, having strong government relationships and understanding how to get assets developed in reasonable fiscal terms is a challenge every counterparty in the mining industry is seeking to address,” says Keating.
Source: Macquarie
That challenge is further complicated by long lead times on new projects - critical mineral projects can take more than 10 years to go from exploration to production13 - and low completion rates.
“Whenever there is enthusiasm for a sector, as there is for rare earths right now, multiple assets will seek to progress and you’re building with an expectation that the market will be there,” says Keating. “But only a small portion of assets get built, so the role of an adviser is to work with the most viable, and that's driven by jurisdiction, the quality of the asset and the management’s capacity to drive forward in the upcycle.”
The cross-border nature of the Macquarie Capital team also has an Australian upside, with global relationships leveraged to take advantage of the country’s mineral wealth. In February 2025, Macquarie Capital facilitated VOC Group’s sale of its 25 per cent interest in the Rhodes Ridge Iron Ore Project to Japanese company Mitsui & Co for $A5 billion - the largest ever implied valuation paid for a pre-construction mining project.
Keating notes that “Mitsui making a long-term, 100-year bet on Australian iron ore,” highlights the importance of trusted advisory in the sector. “Whether it’s understanding the geology, infrastructure, jurisdiction, environmental approvals or the regulations governing foreign investment, we bring that knowledge,” he says.
As the global market for critical minerals continues to evolve, so too has the way in which governments around the world offer support – shifting from debt financing to direct equity interest in projects. Earlier this year, the US Government invested $US400 million into the country’s only fully integrated rare earth producer, MP Materials, becoming the company’s largest shareholder – the Pentagon’s first ever direct equity investment.14
The deal includes a 10-year price floor of $US110 per kilogram for MP Materials' neodymium and praseodymium output, two in-demand rare earths which are found in everything from smartphones to MRI scanners and electric motors.
This represents a fundamental switch in strategy as governments look to neutralise market volatility. The Australian Government has explored similar incentives, including a $A200 million convertible note in domestic mining company Arafura Rare Earths' Nolans Project through the National Reconstruction Fund Corporation, alongside a potential $US100 million equity investment by Export Finance Australia, as part of the Future Made in Australia plan.
According to Vanessa Lenthall, Co-Head of Global Commodity Financing in Macquarie’s Commodities and Global Markets business, it’s a trend that offers upside across the sector more broadly. “Floor price incentives coming into the rare earth space is very helpful for financiers because it ensures you've got line of sight to how you will get repaid and establishes confidence in the viability of the project,” she says. “Often these projects are intricate, involving complex production facilities in remote locations, so for a government to come in and provide completion guarantees is a positive for the sector.”
Source: Macquarie
With increased government support mitigating risk for private capital, critical minerals is not just a strategic focus, but a sector primed for growth.
“In our view, critical minerals are only going to increase in strategic value and underlying demand,” says Keating. “As all those various forces and elements play out, we anticipate there will be continuing vibrant activity across the mining sector in the coming years, you're going to see a fundamental shift in composition of the sector with a substantial number of new entrants.”
1917: The US introduces the first critical minerals list during World War One, made up of five key minerals – tin, nickel, platinum, nitrates and potash – each becoming scarce on its own soil but crucial for military efforts.
1939: World War Two triggers a renewed focus on mineral supply chains. US passes the Strategic and Critical Materials Stock Piling Act.
1946: Australia establishes the Bureau of Mineral Resources, Geology and Geophysics to systematically map the continent and support mineral exploration.
1985: Chinese government introduces an export rebate system that provided a significant tax credit (up to 17 per cent), spurring on the rapid growth of its rare earth industry
1992: Former Chinese leader Deng Xiaoping, the chief architect of China’s reform, signals the increasing strategic value of critical minerals, declaring: “The Middle East has oil, China has rare earths.”
2010: Following a territorial dispute with Japan in 2010, China implemented an export ban on rare earth elements. This ban only lasted two months but encouraged Japan to change its approach for key mineral-dependent industries and supply chain.
2021: The International Energy Agency's (IEA) releases The Role of Critical Minerals in Clean Energy Transition, elevating critical minerals to a global issue across energy, defence and policy.
2025: US and Australia sign the Critical Minerals Framework, a $US8.5 billion deal signed by President Trump and Prime Minister Albanese to accelerate allied mineral supply chains.
DISCLAIMER: This article represents the views of Macquarie Capital’s advisory and principal investing teams and is not a product of Macquarie Research.
