Funding Rare Earth Projects - Rant

[John]

Ok...so this is more of a rant than a post...but here goes...


So the Australian Government has just announced they will buy and stockpile critical minerals from Australian producers.

This is in addition to them providing debt, equity, cash grants, production tax credits....plus i'm sure there are other things they have done too....


WHY?

Well becasue the normal instiutions that fund these mines are too scared to invest.

WHY?

Because China dominates the rare earth market, and can drive these mines bankrupt.


BUT...what about the Australian super funds.....they have about $4 trillion dollars.....and these Super funds should not only be investing to grow their returns for their investors....but also ensuring Australia maintains it's quality of life. And I know that people say they should not be constrained. But if they keep investing our money outside of australia...it can erode Australia! We loose jobs and the knowhow to do things...then we loose entire industries.

I am usually 100% behind a free market. But when that market is failing...and effecting the way of life in Australia....we need to change something.

Maybe these super funds need to be mandated to invest 5% in approved australian sectors (critical minerals, X Y Z).

Now i believe there was talk about this a while ago (maybe a year ago)...but that was about housing....and housing is screwed up in Australia because of all the tax incentives for housing...and immigration. The rare earth sector is different......it is being destoryed by China...so they can maintain their vice like grip on their monoply.


So this is great that Aust govt is supporting the rare earth sector....but should the Aust Govt do all the heavy lifting?

 

[multipolargrifter]

I agree. When it comes to the basics you need to run a country, the government should guide the markets to meet these needs. A completely free market where private capital investment is the one completely pushing markets around leaves immense holes that start to eat away at the fabrics of society. There are trade-offs to every system, but the Chinese economic system's success in undeniable and I think its particularly because they are much more attuned to the issues you raised in this post and aren't afraid to help guide the market to one that creates mutual prosperity and sovereignty instead of raw GDP.

 

[Fundamental]

Ok...so this is more of a rant than a post...but here goes...


So the Australian Government has just announced they will buy and stockpile critical minerals from Australian producers.

This is in addition to them providing debt, equity, cash grants, production tax credits....plus i'm sure there are other things they have done too....


WHY?

Well becasue the normal instiutions that fund these mines are too scared to invest.

WHY?

Because China dominates the rare earth market, and can drive these mines bankrupt.


BUT...what about the Australian super funds.....they have about $4 trillion dollars.....and these Super funds should not only be investing to grow their returns for their investors....but also ensuring Australia maintains it's quality of life. And I know that people say they should not be constrained. But if they keep investing our money outside of australia...it can erode Australia! We loose jobs and the knowhow to do things...then we loose entire industries.

I am usually 100% behind a free market. But when that market is failing...and effecting the way of life in Australia....we need to change something.

Maybe these super funds need to be mandated to invest 5% in approved australian sectors (critical minerals, X Y Z).

Now i believe there was talk about this a while ago (maybe a year ago)...but that was about housing....and housing is screwed up in Australia because of all the tax incentives for housing...and immigration. The rare earth sector is different......it is being destoryed by China...so they can maintain their vice like grip on their monoply.


So this is great that Aust govt is supporting the rare earth sector....but should the Aust Govt do all the heavy lifting?

Before the Government HAS to support Markets with direct funding, they could try plugging a few of the gaps that are draining funding from Projects. First and foremost, they need to stop the pillaging of Company value by the parasites in the Stockmarkets. Brokers, Market makers and Trading funds are as guilty as the Chinese when it comes to destroying a Companie's prospects to raise necessary finance. In Australia the ACCC are as useless as the UK's FCA, I expect the US is no different? We are trapped by our own "Capitalistic" philosophy, Xi must laugh himself to sleep every night!

 

[RareNewsJunkie76]

Appreciate these posts — Felt like it could’ve been written by someone in D.C.

The same dynamics you’re calling out in Australia — the gov stepping in because capital markets won’t touch strategic projects — are playing out in the U.S. too. We’ve got critical min developers here w/ promising deposits and binding offtakes who stil can’t get financing unless Uncle Sam is backing it. Why? Same reason: China’s price manipulation and market dom have train institutional investors to treat REEs like they’re radioactive.

And just like you’ve got $4T in Super funds not backing Aussie industry, we’ve got massive pension funds, endowmets, and ESG-driven allocators still funneling money into overseas supply chains… instead of rebuilding ours. We’re slowly waking up — CHIPS Act, IRA incentives, DPA loans — but none of it is fast or targeted enough.

Free market sounds good >>>> until fails under strat pressure >>>> then gov has no choice but to step in or we lose the sector.


In the U.S., Rubio (R), Gallagher (R), Manchin (D), Warner (D) have been pushing for more direct support — finally saying what needed to be said: this isn’t just economics, it’s about sovereignty.

Meanwhile, Rand Paul (R), Thomas Massie (R), and the Freedom Caucus still act like any gov spending is the apocalypse >>> even when the alt is China cornering the market.

As for the parasites — same story. High-freq traders, shorts, passive churn >>> distort valuations >>> wreck timelines >>> and leave taxpayers picking up the pieces.


Don’t get me started on immigration $$ — whole other disaster

 

[Ian Brown]

Ok...so this is more of a rant than a post...but here goes...


So the Australian Government has just announced they will buy and stockpile critical minerals from Australian producers.

This is in addition to them providing debt, equity, cash grants, production tax credits....plus i'm sure there are other things they have done too....


WHY?

Well becasue the normal instiutions that fund these mines are too scared to invest.

WHY?

Because China dominates the rare earth market, and can drive these mines bankrupt.


BUT...what about the Australian super funds.....they have about $4 trillion dollars.....and these Super funds should not only be investing to grow their returns for their investors....but also ensuring Australia maintains it's quality of life. And I know that people say they should not be constrained. But if they keep investing our money outside of australia...it can erode Australia! We loose jobs and the knowhow to do things...then we loose entire industries.

I am usually 100% behind a free market. But when that market is failing...and effecting the way of life in Australia....we need to change something.

Maybe these super funds need to be mandated to invest 5% in approved australian sectors (critical minerals, X Y Z).

Now i believe there was talk about this a while ago (maybe a year ago)...but that was about housing....and housing is screwed up in Australia because of all the tax incentives for housing...and immigration. The rare earth sector is different......it is being destoryed by China...so they can maintain their vice like grip on their monoply.


So this is great that Aust govt is supporting the rare earth sector....but should the Aust Govt do all the heavy lifting?

John, the only reason Pensana got financed was because it done by African institutions, all the western capital markets did was use Pensana share holders as liquidity fodder to generate volatility to trade on. As means of price discovery, it was complete waste of time. institutions looking for outsized returns on zero risk, its no wonder the london stock exchange is not being considered for IPOs, i see that Cobalt Holdings is the latest to abandon their London listing, Also the Mkango a looking to list on the NASDAQ.

 

[John]

John, the only reason Pensana got financed was because it done by African institutions, all the western capital markets did was use Pensana share holders as liquidity fodder to generate volatility to trade on. As means of price discovery, it was complete waste of time. institutions looking for outsized returns on zero risk, its no wonder the london stock exchange is not being considered for IPOs, i see that Cobalt Holdings is the latest to abandon their London listing, Also the Mkango a looking to list on the NASDAQ.

100% agree. Western stock markets need to protect the junior mines. But they also need to ensure they don't become a "lifestyle" company for management. I think that these juniors should not be exposed to shorting until they reach FID. Plus I would stop mirco trading (ie small parcels of shares to push the SP around).

I feel that this would then prevent all the games that happen on the stock exchanges.

 

[MAC]

Ok...so this is more of a rant than a post...but here goes...


So the Australian Government has just announced they will buy and stockpile critical minerals from Australian producers.

This is in addition to them providing debt, equity, cash grants, production tax credits....plus i'm sure there are other things they have done too....


WHY?

Well becasue the normal instiutions that fund these mines are too scared to invest.

WHY?

Because China dominates the rare earth market, and can drive these mines bankrupt.


BUT...what about the Australian super funds.....they have about $4 trillion dollars.....and these Super funds should not only be investing to grow their returns for their investors....but also ensuring Australia maintains it's quality of life. And I know that people say they should not be constrained. But if they keep investing our money outside of australia...it can erode Australia! We loose jobs and the knowhow to do things...then we loose entire industries.

I am usually 100% behind a free market. But when that market is failing...and effecting the way of life in Australia....we need to change something.

Maybe these super funds need to be mandated to invest 5% in approved australian sectors (critical minerals, X Y Z).

Now i believe there was talk about this a while ago (maybe a year ago)...but that was about housing....and housing is screwed up in Australia because of all the tax incentives for housing...and immigration. The rare earth sector is different......it is being destoryed by China...so they can maintain their vice like grip on their monoply.


So this is great that Aust govt is supporting the rare earth sector....but should the Aust Govt do all the heavy lifting?

 

[MAC]

Excellent points, the American and British Govt did co-sponsor sponsor Oil and mining companies in the past , see WW11 and see the Strategic Reserve in America today which ahs approx. 400 Million Barrels of Oil ( unofficial ) the data changes all the time.
So YES in times of Urgency and or implied Urgency the Govt does become involved in RESOURCES by way of financing, debt , JV .
I think your question is "Now is the time so the company needs to jump in today " and Yes I believe the Govt is doing this ( slowly but surely )

 

[Ian Brown]

John — I agree with your diagnosis on Western capital, but I draw a slightly different conclusion.

The issue isn’t that governments must intervene through stockpiles, offtake or balance-sheet support. It’s that capital has failed to recalibrate risk in a world where supply-chain security, policy volatility and geopolitical leverage now dominate outcomes.

If critical minerals were assessed on a systemic risk basis — rather than treated as discretionary, cyclical commodities — much of this direct intervention would be unnecessary. Capital would flow on its own.

What we’re seeing instead is a mismatch: Western capital continues to treat these assets as high-risk, while allocating heavily to sectors that now carry significant policy and political risk of their own. That mispricing forces governments to step in as buyer, lender, or insurer of last resort.

The US response is instructive. The US$1.5 trillion mobilisation of private capital led by Jamie Dimon / JP Morgan is not subsidy-led — it is risk-reframing-led. Security and resilience are now part of the investment case, not externalities.

I’ve set this out in more detail here, if useful:
https://www.thebrownpaper.net/blog/...ing-critical-supply-chains-in-a-changed-world

So I agree with your critique of Western capital — but I’d argue that persistent intervention is a symptom, not a solution. Correct the risk framework, and the capital follows.

Wishing you and the REEx team a very happy New Year.

 

[Heat.Beat]

I suspect most readers are “free marketeers” at heart but as outlined eloquently above there are problems, primarily with security issues.

Take food (agriculture) as an example- the US has implemented a number of initiatives since the Great Depression to avoid crashing national food supply, such as price supports, producer loans, direct payments,etc. They also had to throw a wider protective net with structural programs private financing wouldn’t touch, such as rural electrification, flood control, the interstate highway system and so on.

We have embraced and institutionalized this safety net while maintaining “free” markets in the ag commodity sector. My point is that when food was viewed as a national security issue, we took off the purist’s glasses.

When you view it all wide angle it becomes obvious government has to provide a structure and various tweaks to protect from malevolent outside actors and parasitic internal ones.

 

[Les Confer]

Appreciate the examples of US gov'ts non-free market programs for their farmers. As a boy in the 1960's, I was kept busy mowing my grandfather's 100 acres because it was in the "soil bank". The gov,t was paying him to not grow any more grains because their grain surplus/price support storage warehouses were full and expensive.

Fast-forward to today and I am a retired Chemical Engineer who is trying to understand the best way to separate Rare Earth Concentrates. When I do, I plan to make some investments in appropriate publicly owned companies.