On 24 April 2025, the Australian Government committed to establishing a Critical Minerals Strategic Reserve (CMSR) to maximise the strategic value of Australia’s critical minerals, allocating $1.2 billion in the 2025-26 federal budget. The reserve is scheduled to be operational from the second half of 2026.

This paper sets out an industry-informed perspective on how to implement the Government’s CMSR. The recommended model, the Rare Earths Production Scheme (REPS), leverages a Contract for Difference (CfD) with a price collar to support rare earths projects in Australia, while minimising risks to taxpayers and aligning with the Government’s policy objectives.

Key points

1. A well-designed CMSR can support Australia’s rare earths industry in the face of growing global supply chain risks.
2. The recommended model is both fiscally sustainable and commercially viable for rare earths producers in Australia.
3. The Government needs to consider a range of design features to operationalise the CMSR