The world’s critical minerals supply chain is at a flashpoint. China’s stranglehold on key processing and refining stages has exposed serious vulnerabilities for Western economies and their allies. Australia’s abundant critical mineral reserves and mining prowess position the country as a linchpin in efforts to break this dependence. In April 2025, Australian Prime Minister Anthony Albanese’s government unveiled its Critical Minerals Strategic Reserve, a stockpiling initiative designed to shore up supplies of minerals vital for advanced technologies, ranging from defence to clean energy.
A critical minerals reserve could act as a buffer against future supply chain disruptions, such as export controls or shipping disruptions. Yet its promise also comes with limitations. Physical and technical constraints make some minerals difficult to store, while miscalculated government intervention could rattle markets. Indeed, adequately mitigating against potential risks demands co-ordination among partners — especially as Canada, the U.S., and the European Union potentially pursue similar measures — so as not to inadvertently undermine broader resilience objectives.
Australia’s stockpiling strategy will offer useful clues to Canada, which shares similar resource profiles and faces comparable geopolitical pressures, as it develops its own stockpiling measures and aligns strategies.
Australia’s strategic reserve
With a C$1.14-billion (A$1.2-billion) investment, Australia’s reserve is expected to be operational by the end of 2026. PM Albanese said the reserve will “address trade and market disruptions from a position of strength” and “prevent manipulation, particularly by state enterprises,” a clear signal of Canberra’s intent to push back against China’s dominance. Instead of amassing a massive physical stockpile, the government plans to maintain small, temporary, and highly targeted inventories of minerals, focused on those that matter most for national and economic security. Rare earth elements (REEs), now at the forefront of geopolitical competition, are among the first minerals to be prioritized.
While the government has yet to release a detailed plan, it intends to support offtake agreements with domestic miners through its export finance credit agency. These national offtakes would allow buyers to lock in future production, improving project financing for Australian miners. Over time, as these holdings mature, the buyers can sell the minerals to global partners, such as Canada, the U.S., Japan, and South Korea.
Historical precedents for commodity stockpiling
Commodity stockpiling as a geopolitical and economic strategy is not a new idea. One example is the Pentagon’s National Defense Stockpile (NDS), the formation of which can be traced to the Second World War, when American policymakers worried that wartime disruptions to global shipping could sever access to vital imported raw materials. At its inception, the NDS was authorized US$100 million to stockpile 42 categories of raw materials needed for wartime production.
During the Cold War, fears of potential Soviet blockades drove a major expansion: between 1949 and 1952, inventory value rose by 250 per cent. Since the end of the Cold War in 1991, the NDS has continued to shrink. By March 2023, its inflation-adjusted value was only about 2 per cent of the 1952 inventory. Yet a deepening rivalry with China has sparked calls to revitalize the stockpile.
Another example is the International Energy Agency (IEA), an international organization founded in 1974 as a response to the 1973–74 OPEC oil embargo, which sent global oil prices surging nearly fourfold within a year. The IEA had in place an oil stockpiling measure that required member states to hold emergency reserves equivalent to at least 90 days of their oil imports. To meet this obligation, in 1975, the U.S. created the Strategic Petroleum Reserve, which today holds over 415 million barrels of crude oil, equivalent to more than four months of U.S. oil net imports. Most recently, following Russia’s invasion of Ukraine in 2022, the U.S., alongside 30 other IEA member nations, released 60 million barrels of oil from their reserves. Canada, though an IEA member, is exempt from stockpiling requirements as a major net oil exporter.
If the IEA was designed to reduce the vulnerability to the economic power of Arab oil producers, a similar dynamic is now playing out in critical minerals, where China dominates crucial segments of the value chain. Beijing, however, is not invulnerable. It still depends heavily on imports for several essential minerals, notably copper, cobalt, and lithium, which has driven it to maintain a stockpile of critical minerals, estimated at between 35 and 133 per cent of annual domestic demand. These reserves are often managed in tandem with domestic production controls and export quotas, a combination that reinforces China’s influence over global markets.
Lessons from Australia:
Prioritize low-volume, high-risk materials while steering clear of bulk or hard-to-store commodities.
Pair stockpiling with processing capacity; a stockpile without domestic or allied refining capacity offers little security.
Significant investment in and collaboration with partners on the midstream segment is key.
Plan and collaborate with international partners from the start.
China’s dominance is now, in turn, driving Western economies to build and expand strategic reserves. After China’s 2010 rare-earth export embargo, for instance, Japan accelerated its rare-earth stockpiling, ultimately accumulating reserves across 34 types of rare metals (excluding industry-held inventories). The baseline target is 60 days of supply, but for minerals deemed highly geopolitically sensitive, reserves can stretch to 180 days.
In short, stockpiles often emerge in the face of crises for import-dependent countries, encouraging them to secure supplies of strategic commodities in case of a market crunch (or future crisis). Today, given China’s entrenched position, critical minerals stockpiling would offer Australia and potentially its allies a meaningful buffer against short-term disruptions.
Stockpiling has limits
Stockpiling, however, is not a ‘be-all-and-end-all’ solution to critical minerals resilience.
Only certain critical minerals are suitable for physical reserve, and governments must weigh cost-effectiveness against physical and technical constraints. Nickel, for example, in its original form, has low purity and requires vast tonnages for any stockpile to matter. Processed nickel, meanwhile, is prone to reacting with air and moisture, requiring specialized storage and monitoring, which significantly raises costs.
Base metals, such as copper, present another challenge. Their global markets are large, liquid, and difficult for any single player to manipulate, making stockpiles both expensive and strategically marginal. By contrast, low-volume and high-importance materials, most notably heavy REEs, sit in easily disrupted markets, making them more promising candidates for targeted reserves.
Australia’s critical minerals reserve appears to reflect this logic. The government indicated that the first batch of candidates will include antimony, gallium, and REEs, materials that are important to defence applications and characterized by relatively concentrated supply. These are precisely the kinds of markets where targeted stockpiles make strategic sense. The reserve’s small and temporary design could also mitigate the physical constraints that plague stockpiling.
A deeper structural constraint, however, lies not at the mine, but in midstream processing, where China retains a dominant and durable lead. For instance, China processes 80 per cent of the global antimony supply and 90 per cent of REEs and refines 85 per cent of global gallium output. Though Canberra has not disclosed the exact forms in which its minerals will be stockpiled, it still sends most of its critical minerals to China for processing. Stockpiles of raw ore would offer limited security if the material must still be shipped to Chinese plants for conversion into usable products.
Government-led stockpiles also raise concerns about market distortion. For instance, large-scale state purchases or releases could drive up prices, potentially harming the very industries that the stockpile is meant to protect. This is why international co-ordination is critical. Without it, parallel national stockpiles could spark a competitive scramble, inflating prices and even triggering tit-for-tat export restrictions.
As Canada, the EU, and the U.S. ramp up stockpile initiatives, the challenge is ensuring these efforts add up to collective resilience. Australia’s reserve, intended to supply partners’ demands and strengthened through co-ordination and consultation with the G7 and broader international community, is a promising step toward pooling strengths for shared security.
Getting Canada’s stockpile right
As Canada moves ahead with plans for its own critical minerals stockpile, it would do well to heed several lessons from Australia:
1. Be selective.
In practice, this means prioritizing low-volume, high-risk materials, such as heavy REEs, germanium, and tungsten, while steering clear of bulk or hard-to-store commodities such as copper or nickel. Pair stockpiling with processing capacity.
Australia’s greatest vulnerability, as well as Canada’s, lies in midstream processing. A stockpile without domestic or allied refining capacity offers little security. Significant investment in and collaboration with partners on the midstream segment is key.
2. Plan and collaborate with international partners from the start.
Canada should align its reserves with partners to avoid overlapping stocks of the same minerals.
By converting geological abundance into geopolitical capital, Australia’s stockpiling strategy not only secures Canberra a place in international and plurilateral fora where industrial policy, defence priorities, and supply-chain rules are developed, but also allows it to accrue latent bargaining power in an era of rising economic nationalism. Canada, with similar resource endowments and strategic interests, would be wise to study Canberra’s playbook.
*This analysis benefited from the guidance of Dr. Pascale Massot, an APF Canada John H. McArthur Research Fellow and advisor to APF Canada’s Canada–Indo-Pacific Critical Minerals Hub.
• Edited by Vina Nadjibulla, Vice-President Research & Strategy, and Ted Fraser, Senior Editor, APF Canada.
