Last Thursday I attended the CEDA Critical Minerals lunch in Perth. The speakers were some of the most credible voices in the sector including representatives of Liontown, Mineral Resources, IGO and Lynas Rare Earths.

We know that WA is an exceptional mining jurisdiction. We know how to get ore out of the ground, with the infrastructure, workforce, capital markets and regulatory track record being continually improved over decades. Where the conversation became harder was downstream processing. While every speaker acknowledged processing is technically achievable in WA, they argued that the economics are much more challenging.

Writing about the Kemerton closure earlier this year, ReGen Strategic noted that the gap between technical possibility and economic reality was central. However, there is a case for challenging the economic reality that hasn’t been available before: producers who build a domestic value chain will be better positioned to access international capital and the offtake opportunities now becoming available.

Sino synchronicity

China’s processing dominance was built on decades of state subsidies, cheap energy, and deliberate planning. We need to recognise that we cannot immediately compete with a country with a complex processing ecosystem that already delivers critical mineral production at scale.

No matter where you are in the world, processing spodumene into lithium hydroxide requires roughly six tonnes of concentrate per tonne of product and generates seven to ten tonnes of lithium slag per tonne of lithium hydroxide produced. In China, that slag feeds into cement, ceramics, and building materials, industries that absorb the waste stream and convert it into revenue. In WA, those downstream uses are largely absent, so the waste becomes a cost. That is one of the reasons Kemerton became unviable. The others are equally structural: Australian processing operations face energy costs and labour costs that Chinese facilities do not, and no amount of operational efficiency closes that gap at current commodity prices.

Government has a role here over the longer term, by securing lower cost energy via renewables, streamlining approvals, training skilled domestic employees and encouraging common use infrastructure. These are decade-long commitments, and they need to be recognised as such by successive governments in the same way that State Agreements have been held sacrosanct.

In addition, government policy can be an economic force to mandate the utilisation of appendices of a value chain. The recent announcement by the Cook Labor Government to support the reuse of lithium by-products, as a component of construction material, is an example of reducing incremental costs and supporting other policy priorities.

The fuel crisis that hit our shores in recent months showed exactly what single-source dependency looks like when supply is disrupted. As we explored at the time, the consequences of concentrated, single-source supply chains for critical inputs are real and felt quickly. Critical minerals are the next version of that risk, playing out over a longer timeframe but with higher strategic stakes for AI, critical hardware and defence.

Reaching FID on a downstream processing project in Australia requires years of relationship building, patient capital, and government support that outlasts electoral cycles. Remaining dependent on a single nation that has already demonstrated willingness to use mineral supply as a trade lever carries its own very real costs, as China’s rare earth export restrictions made plain.

Looking to our trading partners

The US-Australia Framework for Securing of Supply in the Mining and Processing of Critical Minerals, signed in October 2025, demonstrates the power of international partnerships. Both governments committed to deploy at least US$1 billion each in financing within six months. The initial package already includes US$200 million toward Alcoa’s gallium refinery in Western Australia and US$100 million toward Arafura’s Nolans rare earths project.

Japan has been doing a version of this for fifteen years. The Japan Australia Rare Earths joint venture provided equity and loans to get Lynas Rare Earths’ Mt Weld operation established and has renewed its supply contract at 7200 tonnes of neodymium-praseodymium annually through to 2038. The Australian Government layered AU$1.65 billion in concessional loans through Export Finance Australia and AU$34 million in manufacturing grants commitment, which made the Kalgoorlie processing facility financeable. The combination of long-term government-backed offtake at a known volume alongside government manufacturing funding is the template every critical minerals processing project should study.

The EU signed a strategic minerals partnership with Australia in May 2024. The European Investment Bank committed in late 2025 to finance Australian critical minerals projects directly. More than 10 per cent of all EU Strategic Projects under the Critical Raw Materials Act now have Australian links. The architecture for allied support is now waiting for projects structured to engage with it.

Two models worth watching

Two Western Australian companies illustrate what that structuring looks like in practice. Both are clients of ReGen Strategic, and both are approaching FID from different angles.

Australian Vanadium Limited (ASX: AVL) has designed a pit-to-battery value chain in which vanadium concentrate from its Gabanintha deposit, near Meekatharra, would feed a processing facility producing vanadium pentoxide, which in turn feeds an electrolyte manufacturing facility supplying vanadium flow batteries to the grid. The company already operates a commercial vanadium electrolyte facility in WA and is currently bidding for the AU$150 million Kalgoorlie Vanadium Battery Energy Storage System project.

Due to vanadium’s unique properties as a non-degrading long-duration energy component, AVL saw the end market and built backward. That foresight makes the project credible to government and attractive to development and offtake partners. The vanadium case is helped by Australia holding the world’s largest vanadium reserves, and by the clear alignment between the capabilities of vanadium flow batteries and WA’s long-duration energy storage needs.

Tungsten Mining NL (ASX: TGN) takes a different approach. Its Mt Mulgine project in the Murchison region holds a JORC resource of 247 million tonnes, containing 270,000 tonnes of tungsten and 69,000 tonnes of molybdenum, alongside one million ounces of gold, 44 million ounces of silver, and 92,000 tonnes of copper. China controls around 83 per cent of global tungsten production and has already imposed export restrictions on a globally recognied critical mineral.

The scoping study shows Mt Mulgine is capable of supplying the entire annual US tungsten demand from a single WA operation. TGN is in active offtake conversations with customers in North America and Europe and has sent product samples to potential buyers. The polymetallic character of the deposit, tungsten plus molybdenum, gold, silver, and copper, materially improves project economics and make the case for development considerably stronger. This timing of development, to coincide with strong demand signals, allow for a consideration of additional downstream processing to export a more refined product to strategic trading partners.

The full output stream

Australian producers should consider designing projects around the economics of the entire processing stream, including byproducts. Chinese processing facilities utilise the waste stream as productively as possible, given the scale of their economy and industrial footprint. Thorium recovered from rare earth processing feeds nuclear materials. Sulphur from tungsten refining feeds the chemical industry. This is where government also has a role in common processing infrastructure and linking up projects within strategic industrial areas that could help build supply chains. One might also consider the role of modernised State Agreements over the longer term.

WA project developers should be considering downstream processing and how this might be built into the project design before the approvals process begins. ReGen’s approvals practice works with critical minerals producers across the State through EPA Part IV and Part V referrals, EPBC assessments, and alignment with government policy. We can also support the consideration of funding pathways, including the $7 billion Critical Minerals Production Tax Incentive and the $1.2 billion Strategic Reserve programs administered by the Commonwealth.

Picking lanes

There is a legitimate concern that government support for downstream processing becomes a case of picking winners, a distortion that can break the market. Identifying strategic supply chain lanes and creating conditions for multiple projects to compete within them is preferred, and a posture the US-Australia framework adopts.

The framework commits capital and offtake toward defined strategic objectives across multiple minerals. The Rapid-Response Supply Security Group, co-chaired by the US Secretary of Energy and Australia’s Resources Minister, can convene on ten days’ notice to direct instruments toward emerging vulnerabilities.

The most effective projects have drawn on multiple instruments simultaneously. As outlined above, Lynas is the clearest example of what the full stack can achieve. Meanwhile, Liontown drew on a AU$15 million state interest-free loan and port fee waivers from the Cook Government’s Lithium Industry Support Program, a AU$120 million Export Finance Australia facility, and a AU$50 million National Reconstruction Fund contribution to sustain Kathleen Valley through a capital raise and the lithium price downturn.

For government, the gap is in translating political commitment into specific, long-dated, volume-backed offtake arrangements that make project financing work. That means active engagement with project proponents to navigate the detail of guidelines and applications. ReGen’s government relations practice works with developers to build and navigate those relationships across multiple jurisdictions.

What producers should do now

Projects that attract government and private support are those that can present a credible supply timeline for high-priority critical minerals required by Australia and its closest trading partners, including offtake agreements and industry opportunities that extend beyond the mine gate.

That means engaging with Export Finance Australia, NAIF, and their US counterparts (the Export-Import Bank, DFC, and the Department of War’s industrial base programs) while the feasibility study is being designed. It means understanding which government agency has the clearest strategic interest in the specific mineral and building a relationship with it. And it means getting the approvals pathway right early.

Projects like Talison Lithium’s Greenbushes operation demonstrate what is achievable when regulatory strategy, community engagement, and government relations are integrated from the outset. ReGen’s Approvals Navigator, a joint offering with Tactica Advisory, is built for complex multi-agency pathways, covering EPA, DWER, DMIRS, and DCCEEW alongside stakeholder engagement and ministerial engagement from pre-feasibility through to financial close.

Will downstream have its day?

Downstream processing in Australia requires our trading partners to recognise a sustained premium long enough for processing infrastructure to reach viable scale, in return for reliable supply. Japan has done this for fifteen years through the JARE arrangement with Lynas. The US and EU are now committing to the same approach. Whether that commitment holds across external volatility, electoral cycles and trade negotiations is the uncertainty. The Lynas success, Kemerton’s failure, Nickel West’s suspension, and the fuel supply crisis all point to the same lesson: market exposure without sufficient structural protection can be fatal.

The path from explorer to producer to processor is complex. It takes a whole value chain, relationships with governments and government agencies, and the patience to build them before private capital and markets will follow.