By Andrew Pickford, Wolfgang Alschner, and Heather Exner-Pirot
June 4, 2026
Introduction
The security and reliability of global supply chains has been repeatedly undermined in the past six years, by pandemics, wars, trade disputes, and disruptions. The consequence is that states are thinking much more strategically about how and where they source the goods they need for their economies and national security.
The risks involved in having insufficient domestic or allied supply of critical raw materials have been particularly exposed. Since 2022, advanced democracies in Europe, North America, and the Indo-Pacific have paid particular attention to mineral supply chains, finally appreciating the extent to which they are dependent on competitor sources.
While most of Asia and Europe are net importers of raw materials, Australia and Canada stand apart as geographically large, resource-endowed, export-oriented democracies. Both are large raw materials exporters in their own right; combined, they would be a top five producer for almost every significant energy and mineral commodity. They have the capacity to buttress or fulfill much of their allies’ supply needs, and jointly can resist some of the manipulation, coercion, and disruption evident in global commodities trade today.
“Strategic cousins”: Moving from goodwill to concrete action
Australia and Canada should be working together to establish a resource alliance. Both countries have seen their export sectors undermined, and even pitted against each other. Evoking sentiments about a status as “strategic cousins”[i] with similar histories, governance, development, and worldview is a start, but it is not concrete action. While the familiarity is comfortable, there has been a lack of direct collaboration.
Translating common interests and shared values into joint action has been a perennial challenge for the relationship. As Peter Jennings said succinctly in a column in The Australian during Prime Minister Mark Carney’s March 2026 visit, “Practical co-operation is much harder to deliver than speeches in Parliament. As [former Prime Minister] Abbott and [Prime Minister] Albanese both realized, there is great potential in bilateral ties, but it has never been delivered. Unless there is energized political engagement from the top, Canada-Australia ties will languish.”
Today’s upheavals create new urgency and political will to deliver on the promise of Australia-Canada co-operation. In his February 2026 Davos speech, Carney spoke of a “rupture” in international relations and called on middle powers to develop new partnerships and coalitions. During his visit to Australia in March 2026, the Canadian prime minister referred to Australia as “a natural partner in this mission.”
What are some key premises and tangible recommendations that could turn this vision into reality? A resource alliance, starting with critical minerals, could serve as a platform for consequential collaboration between Canberra and Ottawa. Critical minerals are not only increasingly important for statecraft, but a cornerstone of the bilateral relationship. The March 2024 Critical Minerals Statement and the Joint Declaration of Intent (JDI) between Canada and Australia on Critical Minerals Collaboration, signed on November 1, 2025, already provide solid foundations. Moreover, Australia joined the Critical Minerals Production Alliance in March 2026 – an initiative launched by Canada during its G7 presidency in 2025. The challenge now is to fully utilize the platform provided by these initiatives.
The opportunity of the two Western mining superpowers joining forces is significant. As a recent Australian Strategic Policy Institute report recommended:
Australia should utilize its leadership, alongside Canada, as one of the two largest producers of primary critical-minerals products, and one of the two largest investors in global exploration and mining, to ensure that its position in minerals supply chains is strengthened and that like-minded industrialized nations and groupings tailor their minerals security strategies to directly engage with Australian minerals companies to facilitate their investment.
For Australia and Canada to rise to that challenge, we must first set out premises for collaboration and identify specific recommendations for coordinated action.
Premises for deeper collaboration
The policy challenges in the critical minerals space are well-known. Supply chains are concentrated, especially in processing, and often dominated by China. The resulting chokepoints have become weaponized for geopolitical objectives, and demand- and supply-side factors have led to chronic underinvestment in Western capabilities, further exacerbating concentration. Recognizing these problems is important, but does not provide pathways for policymakers to follow.
Those pathways must contend with certain parameters that Australia and Canada operate within – market structures, geopolitical trends and trade patterns which, even combined, Australia and Canada cannot shift. This does not mean that a resource alliance cannot achieve objectives or serve the interests of both nations. It means initiatives need to be targeted, realistic, and aimed at enhancing a collective position within the existing market-based system.
To situate the Canada-Australia resource alliance and its potential, four premises inform subsequent recommendations for action:
1) Value proposition: Capturing the reliability premium
Critical minerals markets have been disrupted by geopolitical shocks, fragmentation, and weaponization. The problem for buyers is not necessarily price – some key commodities have even seen price declines since 2025 – but reliability: will consumers, buyers, and offtakers get access to what they need? In that context, Canada and Australia have a positive role to play by jointly acting as reliable and trusted suppliers. Our stable political systems, market-orientation, commitment to a predictable rules-based system, and openness are strengths and not weaknesses in this regard.
As trade-dependent middle-sized market economies, Australia and Canada are deeply embedded in and committed to the rules-based trading system. Both countries share concerns about illegal trade measures, market-distorting practices, supply chain concentrations and weaponized interdependencies, and favour depoliticized competition on commercial terms. Collectively, they can contribute supply and redundancy that makes weaponization less effective, buffer against shocks, and reinforce a market-based trading environment; all while depoliticizing key commodity supply chains.
Fully capturing the reliability premium requires joint action, especially since Australia and Canada have often been played off against each other by larger trading partners. It also requires a continued commitment to market-based principles, open trade, and global supply chains. But the rewards are significant. Efforts to ensure security of supply promise new investment into the Canadian and Australian mining value chains and will enhance their role as stabilizing forces in the global economy.
2) Geopolitical context: boosting middle power resource supply
As allied democracies operating within a broader Western and Indo-Pacific security architecture, Australia and Canada have vital roles to play in shoring up the western industrial base that safeguards collective security. They support G7 and NATO efforts to achieve greater resource independence from single suppliers. At the same time, the customer base of a Canada–Australia resource alliance is global.
Canada and Australia have a track record as reliable suppliers with countries across the world. Amid a US grain embargo against the Soviet Union during the Cold War, Canada continued to honour its obligations under a 1963 treaty to send wheat and flour to the Soviet Union. Similarly, Australia kept a deep trading relationship with China even as the US erected tariff walls during the first Trump administration. Both Canada and Australia are multilateralists by orientation. In short, Canada and Australia do not have to choose between being integral parts of a Western value system and security architecture and trading partners for countries across the world.
Nor would the objective of a Canada and Australia resource alliance be to replace China. China’s industrial strategy and legacy infrastructure will continue to shape the critical minerals sector for decades. Their strategy for expanding and controlling rare earth processing over the past three decades, for example, is inextricably linked to China’s EV and manufacturing base and cannot be usurped. In short, there will be a continued dependence on China. But developing alternative supply through a carefully targeted build out can limit leverage over single suppliers, prevent coercion and increase supply chain resilience.
While a wider, Western coordination will be necessary to reduce supply chain risks to acceptable levels, combining Australian and Canadian market shares and resource capacities can create meaningful influence rather than dominance. The ultimate objective is to retain a free market orientation to the extent possible, while preventing the structural undermining of Australian and Canadian interests by external actors. Effective Canadian and Australian statecraft can bolster market-based resource developers in a world increasingly dominated by strategic industrial policy and state intervention.
3) Approach: Industry-led, but government-enabled
Canada and Australia’s market orientation provides credibility, efficiency, and predictability, but it can also leave producers exposed when competitors use state-backed tools. The reality is that many critical minerals are not governed by pure, market-based logic. Average prices are not set at liquid spot markets but discovered ex post by reviewing long-term supply contracts. Supply and demand are often concentrated and dominated by a handful of players. Short- and long-term incentives often diverge.
The Canadian and Australian governments can play a vital role in counteracting such distortions. Targeted governmental interventions can promote price transparency, ensure a level playing field, and align private and public interests. In addition, public funds will be needed to backstop or leverage private capital. But where public money is risked, mechanisms should be in place to ensure that taxpayers receive a concomitant financial return or benefit.
Such efforts should not result in a command-and-control industrial policy or fuel a subsidy race to keep up with high-spending superpowers. Canada and Australia’s resource sectors will continue to be led by private firms, financed through markets, and disciplined by commercial risk. Yet, governments cannot be passive in the current geopolitical era.
In some cases, government may only need to improve information, permitting, or standards alignment. In others, the relevant tool may be offtake support, procurement, stockpiling, production credits, modernization grants, contracts for difference, or risk-sharing finance. The key parameter is discipline: intervention should be tied to a defined market distortion or strategic vulnerability and require deep coordination between industry, where expertise and data sit, and the public sector as necessary.
Sustainability should be treated in the same pragmatic way. High environmental, labour, Indigenous, and governance standards are part of Canada and Australia’s reliability premium. They reduce political risk and sustain social licence. But standards must be credible, workable, and proportionate. If they become cost-blind or detached from market realities, they can undermine the very resilience they are meant to support.
4) Focus: Prioritizing specific minerals supply chains and crafting tailored instruments
A Canada–Australia resource alliance cannot treat “critical minerals” as a singular market, concept or risk. Minerals differ by liquidity, price transparency, concentration, processing bottlenecks, qualification cycles, demand structure, strategic sensitivity, and project finance constraints. At the same time, as a recent report by the World Economic Forum underlined, different mineral ecosystems require different policy approaches.
A strategy or intervention that makes sense for one mineral may be counterproductive for another. Stockpiling small, strategically important materials may be affordable; stockpiling large volumes of copper or aluminum is far more expensive. A price floor may be useful where a specific market distortion is causing capacity loss; it may be wasteful where the real problem is permitting, technology, or qualification. A buyers’ club may help where demand is fragmented; it will not solve a processing bottleneck by itself.
Recommendations
Following from these premises, four key recommendation themes arise where Australia and Canada can work together related to 1) coordinated action, 2) pricing transparency, 3) alignment in processing capacity, and 4) broadening of co-operation:
Theme 1: Coordinated action
Recommendation – Align stockpile design with reciprocal access and an agreed division of commodities
Stockpiling is an important tool both to guard against disruption and to help stabilize prices by creating new sources of demand. Historically, however, stockpiles and market interventions have faced challenges and imposed additional costs, ultimately paid by the end consumer or taxpayer. In this period of geopolitical tension, bearing some of these costs is now perceived to be prudent. But we should avoid competing against each other and drive up costs.
Australia has progressed a stockpile concept through a Critical Minerals Strategic Reserve (CMSR). Canada is implementing its critical minerals strategy through existing federal programs and does not yet have an explicit stockpile policy.
The Australian CMSR will focus on “selective stockpiling of minerals, where required,” which is expected to prioritize low-volume, strategically important materials, such has heavy rare earths. An opportunity exists for Australia to work with Canada to align the CMSR with stockpile strategies that Canada is developing.
As the Australian CMSR is finalized and Canadian options are evaluated, the design of any (national) stockpile is paramount, a truism that extends to any bi-lateral endeavour. Design features should include the elements outlined in Sidebar 1.
Ultimately, as the stockpile is developed, there will need to be a division of efforts between the two countries. This should also anchor approaches to midstream and downstream processing, which is covered in the recommendation relating to joint investment in strategic processing hubs.
Sidebar 1: Best practices on strategic inventories and price supports
A strategic reserve should support domestic production without distorting commercial markets. When public inventories are released without regard to domestic production costs, governments can depress prices and undermine the very industries they seek to protect. Four principles should therefore guide such inventories.
Principle 1: Establish a cost-based floor price for inventory purchases.
The floor price at which stockpiles are purchased should be based on average domestic production costs, including all-in sustaining cash costs, operating expenditures, capital expenditures, and corporate costs. The objective is to identify the cash price required to sustain domestic production and protect producers from market manipulation by global suppliers not disciplined by comparable cost structures.
Principle 2: Make government the buyer of last resort, not first resort.
Producers should always prioritize sales to end users at or above the floor price. Where end-user demand is absent, government may contract for future supply at the floor price, giving producers confidence to invest and produce. If commercial demand later emerges at or above the floor price before production or delivery, producers should be able to cancel the government contract and sell to the end user without penalty.
Principle 3: Use government support to protect the floor price.
Where end-user demand exists but prices fall below the floor price, producers should still serve end users, with government bridging the gap through cash-based tools such as rebates, tax credits, or similar support mechanisms.
Principle 4: Do not allow government inventories to displace producers.
If government purchases material because commercial demand is absent, it should not later sell that material directly to end users when demand returns. Doing so would place the government between producers and customers and distort the market. Instead, producers that sold into the reserve should have the right to repurchase the material for resale to end users. This allows producers to make efficient make-or-buy decisions, while preventing strategic inventory from flowing to traders or intermediaries whose incentives may not align with sustaining domestic production.
Recommendation: Promote non-tariff approaches to Western critical mineral co-operation
The United States has initiated discussions to create a critical minerals trade bloc based on common minimum prices and trade barriers to outside countries to stimulate critical minerals trade within the block. The proposal tackles an important problem: price volatility and excess supply can make new mining or new processing facilities commercially unviable, which, in turn, risks undermining production by market-based actors and leads to concentration of supplies in jurisdictions that strategically support capacity build-up even where it is commercially unviable.
At the same time, there are risks. Inclusion in a tariff club could undermine the ability of Canada and Australia to serve as trusted, autonomous suppliers. There are inherent tensions within the US-led initiative, given the US is directly imposing tariffs against Canada and Australia – including on aluminum, a critical mineral based on the NATO list. Finally, imposing tariffs on third states would likely be in conflict with multilateral trading rules, which could risk triggering retaliation.
A Canada–Australia resource alliance should therefore promote non-tariff-based approaches to Western co-operation, employing different means to achieve similar ends. For rare earths and graphite, for example, where global production is concentrated and pricing manipulation exists, the Nouveau Monde Graphite Mine in Quebec provides a template. The project is supported by commercial offtake arrangements and a government package combining public equity, state-backed project debt, and a take-or-pay graphite purchase agreement to de-risk financing and support domestic production. For high-volume commodities, broader tools such as political risk insurance or product standards would be WTO-compliant alternatives to allow for project de-risking and price differentiation. The message should be that the West can de-risk on critical minerals without erecting tariff walls.
Recommendation: Turn the Critical Minerals Production Alliance into a transnational “major projects office”
The inclusion of Australia in the G7 Critical Minerals Production Alliance provides a unique coordination opportunity for the two democratic resource exporters to provide trusted optionality in markets where supply has become concentrated, politicized, opaque, or under-invested.
Coordination should consist of two components: (1) a division of labour and (2) pooled financing instruments. While some minerals are mined in either Australia or Canada, there is a need to coordinate on the production of overlapping minerals as well as in down-stream processing. Projects could be further supported through pooled financing tools including via export credit agencies and possibly involving Australian and Canadian superannuation or pension funds. Eventually, the Critical Minerals Production Alliance could be further institutionalized through its own funding and administrative support akin to a transnational “Major Projects Office” that would help advance joint projects.
Theme 2: Pricing transparency
Recommendation – Build a joint Aus-Can critical minerals market intelligence and value chain mapping capacity
How do Canada and Australia get more visibility into critical mineral supply chains? A relatively simple first step for bilateral co-operation is to create a joint research office to create a common, agreed upon set of facts in the critical minerals market. This would entail combining our market intelligence to add transparency and understanding on minerals and include value chain mapping.
Collaboration already occurs between the peak industry bodies, governments, and the leading critical minerals coordinators. In the proposed analysis of the supply chain, it will be important to differentiate the actual supply in relation to the planned supply, to ensure that there is delineation between firm capacity (as well as projects that have reached “final investment decision”) and speculative ventures. Visibility on the mining, refining, and processing steps of some of the extremely rare commodities could also give respective governments options to coordinate market interventions where there could be a single mine (and associated processing hub). This capacity would also be useful to implement the R&D clause in the JDI. The joint intelligence effort could eventually be rolled over into the G7 Critical Minerals Production Alliance.
Recommendation: Establish pricing transparency to remove the opacity of the market and introduce clear signals to producers
A common theme expressed across commercial, government, think tank, and academic forums is the opacity of some critical mineral markets. To remove the veil of secrecy and speculation, public reporting of transactions through an independent, private platform should be implemented. This would involve a compliance mechanism requiring reporting of transactions to an independent market research entity that publishes this market data on a regular basis. Making this a requirement for receiving government support and limiting an initial trial to two to three commodities will build confidence.
From a design perspective, this should not sit with governments, but with independent market research firms (which already do this for higher volume, bulk commodities). Furthermore, this should capture genuine sales (and therefore supply, demand, and pricing trends) and filter out any speculative or paper-pushing trade transactions.
Recommendation: Require visible rare earth tolling agreements to establish transparency
At present the West is playing catch up with rare earths, especially on the processing side of the equation. It is important to remember that China controls 90 per cent of rare earth processing, and is the most efficient and competitive actor thanks to 30 years of strategic investment. The result is that the technological development, scientific base and processing improvements have been concentrated within China. Even with subsidies, matching that capacity would probably cost over $100 billion and take at least 15 years to implement.
This points to a need for a more comprehensive strategy that begins by understanding the costs and drivers at each step of the process. This recommendation works on the basis that China will continue to dominate the processing of rare earths but would require the reporting of the cost of tolling and associated terms to start to rebalance the asymmetric information and knowledge base. Japan has already used transparent offtake guarantees with allies; the disclosure of tolling agreements can be framed as part of the general shift towards market transparency, rather than aimed at undermining a particular nation.
Theme 3: Aligning strategic processing capacity
Recommendation: Align strategies for establishing processing hubs for specific commodities
How do Canada and Australia coordinate to build downstream processing? The alignment of strategic processing capacity through processing hubs for specific commodities is probably the most complex policy recommendation and will be viewed as the most difficult. It is also the most important step, as it provides a tangible, physical start to a broader resource alliance. The core of this recommendation is for Australia and Canada to jointly fund two to three large-scale processing facilities targeting specific bottlenecks – areas where China has a true monopoly. Like the respective internal political competition of investment between states and provinces, this will create tensions and will be met with skepticism. For this reason, it should start with shared and unique critical minerals on a narrow basis. The co-investment aspect is important as it will ensure continuity in inevitable ups and downs of the relationship.
In discussions, we divided commodities into two categories: defensive and offensive plays. China has market dominance and is an entrenched actor in the defensive category. It does not have market dominance in the offensive category. In this context, it may be a significant actor but does not have control. This includes uranium; light rare earths; niobium; scandium; vanadium, and cesium.
We undertook further analysis to quantify the optimal, high-priority commodities to prioritize. This involved weighted analysis on the following criteria: allied list review; China export restriction severity; Australia–Canada combined production capacity; supply chain gap/Western import dependence, and strategic demand growth.[ii]
In the final review, we identified the following priority areas recommended for further, joint development and alignment:
- Rare earth separation
- Graphite spheronization (making graphite particles into spherical shapes)
- Gallium recovery and refining
- Antimony refining
- High-Purity germanium refining
- Niobium alloying and advanced materials
As foreshadowed, the stockpile and offtake strategy should support the joint development of processing capability.
Theme 4: Broadening the alliance beyond critical minerals
While it makes the most sense to anchor a Canada–Australia resource alliance on critical minerals, there should be opportunity to expand coordination to other commodities once the concept is put into practice and tested. Canola, a key agricultural product, is an obvious candidate.
Recommendation: Establish a bilateral support mechanism for disruptions to the canola market
While canola is a soft commodity and in a very different category to critical minerals, it is a commodity where both Australia and Canada have been experienced de facto bans on exporting into China that appear to be linked to bilateral disputes. With Canada the number one exporter of canola, and (in good production years) Australia number two, this market power could be leveraged. Combined, both countries represent over 70 per cent of global canola exports. Traditionally, each country has opportunistically responded to bans on the other. To mitigate the highly fluctuating price, which is an issue for farmers on both sides of the Pacific, there could be bilateral swap mechanisms that support each other during trade disputes. While this will ultimately be led by Ottawa and Canberra, the formation and practical administration considerations means that the main producing regions (the Canadian Prairies and Western Australia) should also be involved in establishing the mechanism.
Recommendation: Convene a closed-door, bilateral simulation exercise to investigate how to apply an alliance strategy to bulk commodities
This think-tank collaboration attempting to align critical minerals strategies commenced prior to the 2026 United States–Israel war against Iran and the supply shock of oil and related commodities. The oil shock has led to a broader consideration (in Australia) on leveraging the export of its commodities to ensure assured access to refined fuel. It has reached the point where exports of LNG, iron ore, and coal have been explicitly referenced as leverage to further the national interest. If the global order continues to deteriorate and supply chains become increasingly securitized, it would be timely for a classified, closed door exercise between the two nations to explore scenarios in which bulk commodities – including possibly uranium and potash – serve as tools of statecraft and geopolitical leverage. This secret activity could inform respective intelligence and national security leaders on an extreme disruption scenario, in a similar way to which the original scenario planning exercises helped position Shell for the initial OPEC oil shocks.
Conclusion
Critical minerals and supply chain security are increasingly a matter of statecraft. While Canada and Australia will retain their commitment to the rule of law and market-based trade, they should not be passive actors in the increasingly turbulent world of resource geopolitics. Indeed, the vast majority of the world would benefit from the two nations, and their predisposition to reliability and trustworthiness, to flex more muscle and brains in efforts to reduce volatility and coercion in commodities markets.
Acknowledgements
The findings of this report were developed at a workshop of industry, academic, practitioner and government representatives, held in Banff, Alberta, in February 2026. The workshop was funded with the generous support of the Asia Pacific Foundation of Canada.
The authors would like to acknowledge the intellectual contributions of the other workshop participants. The authors bear sole responsibility for the findings in this report.
About the authors
Andrew Pickford is principal research adviser: resources and infrastructure at the Perth USAsia Centre in Western Australia, overseeing its work on resources and the growing influence of geopolitics on the sector.
Wolfgang Alschner holds the Hyman Soloway Chair in Business and Trade Law and is a full professor at the University of Ottawa Common Law Section with cross-appointment to the Faculty of Engineering, School of Electrical Engineering, and Computer Science. He is also a faculty member of the Centre for Law, Technology and Society at the University of Ottawa and heads the uOttawa Legal Technology Lab.
Heather Exner-Pirot is a senior fellow and Director of Energy, Natural Resources, and Environment at the Macdonald-Laurier Institute. She has over twenty years of experience in Indigenous, Arctic, energy, and resource development policy and governance. Her research focuses on energy security, critical minerals, Arctic governance and security, resource politics and Indigenous economic development. Exner-Pirot holds a PhD in Political Science from the University of Calgary and serves on several advisory boards and networks related to Indigenous economic development, Arctic policy, and Canadian security. She is also a special advisor to the Business Council of Canada.
[i] In his address to the Australian Parliament on March 5, 2026, Canadian Prime Minister Mark Carney stated: “Although we could not be physically further apart, Canada and Australia are “strategic cousins.” The phrase “strategic cousins” is a reference to the book of the same name by John C. Blaxland, first published in 2006, which compares the military history and potential benefits for closer collaboration between Australia and Canada.
[ii] This measurement looks at the growth in global demand for this critical mineral and whether it is coming from technologies that cannot easily function without it. The strategic description separates ordinary commodity growth from demand driven by stated long-term geopolitical and industrial priorities.
Both are important, but I would favour creating a new section at the end of the paper under “Broadening the resource alliance” where we place the non-critical minerals items.
