India and Australia are pushing forward with plans to reshape the global rare earth supply chain, a move that could have far-reaching consequences for electric vehicle (EV) manufacturers and technology industries worldwide. As of August 10, 2025, both countries are deep in negotiations to expand their 2022 critical minerals investment partnership, exploring joint ventures that span the sourcing and collaborative processing of rare earth elements (REEs)—materials vital to everything from EV batteries to defense systems, according to the South China Morning Post (SCMP).
Rare earths—comprising 17 minerals essential to modern technologies—are not exactly rare in nature, but they’re costly and complex to extract, especially the heavy rare earths like terbium, which command premium prices. The global market for these elements is currently dominated by China, which controls over 60% of mining and nearly 90% of processing output, SCMP reported. This concentration has left industries and governments worldwide scrambling for alternatives as Beijing tightens its grip on exports.
Australia, home to major deposits such as the Mount Weld mine in Western Australia, has emerged as a leading alternative supplier. India, meanwhile, boasts the world’s third-largest reserves—about 6.9 million tonnes—primarily in monazite-rich sands along the coasts of Andhra Pradesh, Odisha, and Kerala, with new discoveries in Rajasthan’s Jalore and Barmer districts. Yet, India produces less than 1% of global output, hobbled by outdated mining methods, processing constraints, and legal restrictions under the Atomic Energy Act of 1962.
The urgency for diversification has only grown in recent months. In April, China imposed export restrictions on eight key EV battery technologies, including crucial components for battery cathodes. These cathodes determine the energy density and performance of lithium-ion batteries—the beating heart of electric vehicles. China also tightened controls on rare earth magnets, indispensable for EVs, wind turbines, and a host of electronics. The result? A sharp drop in global shipments, delays across supply chains, and a ripple of uncertainty felt from Detroit to New Delhi.
India’s own EV and auto parts industry has not been immune. Automakers there have reported delays in sourcing magnets and electric motor components, with some forced to wait weeks for shipments or overhaul their procurement strategies entirely. The heavy reliance on Chinese suppliers has prompted Indian policymakers to double down on efforts to secure a stable, diversified supply of critical minerals—an imperative for both technological advancement and economic resilience.
“Australia’s advanced mining technologies and established supply chains could help India overcome production bottlenecks,” analysts told SCMP. Australian firms are already eyeing participation in upcoming Indian auctions for rare earth mineral blocks. Canberra, for its part, is weighing the introduction of a price floor to support its domestic critical minerals industry and has pledged 1.2 billion Australian dollars (about $782 million) for a strategic reserve. Business forums such as the Australia-India Business Exchange are set to play a pivotal role in facilitating this cooperation, though challenges remain on both sides.
India faces strict environmental regulations, low mineral concentrations, and high extraction costs, while Australia must balance new partnerships with safeguarding its own resource security. And with China unlikely to ease its rare earth supplies to India in the short term, New Delhi is looking to deepen ties not just with Canberra, but also with other members of the Quadrilateral Security Dialogue—namely, the United States and Japan. However, relations with Washington have recently grown complicated, with new U.S. tariffs raising the duty burden on Indian imports to 50%, casting a shadow over ongoing trade negotiations.
Against this backdrop of global trade tensions and shifting alliances, the India–Australia collaboration is seen as a critical step toward securing rare earth supply chains. Both countries could soon find themselves influential players in a sector that underpins the green energy transition and national security priorities worldwide.
The stakes are not just geopolitical. The ripple effects of China’s export restrictions are already being felt in boardrooms and factories across the globe. Take Rivian Automotive, for instance. The U.S.-based EV maker reported a wider-than-expected loss for the second quarter of 2025, citing higher material costs and shrinking revenue from U.S. regulatory credit sales. According to LSEG data cited by Reuters, Rivian posted an adjusted loss of 80 cents per share—well above analysts’ forecast of 65 cents.
“Supply disruptions in heavy rare earth metals, key components for electric motors, have sharply increased production expenses,” Rivian stated. The company pointed directly to China’s recent export restrictions as a major factor roiling global supply chains. For Rivian, this policy shift has meant higher raw material prices and logistical delays, pushing up the cost of EV production in the U.S.
The company has been forced to revise its full-year adjusted core loss guidance to a range of $2 billion to $2.25 billion, up from a previous forecast of $1.7 billion to $1.9 billion. Part of this increase stems from a steep drop in income from selling regulatory credits to legacy automakers—a revenue stream that has dried up since the Trump administration removed penalties for noncompliance with fuel economy and emissions targets.
Production has slowed as well. Rivian delivered 10,661 vehicles in the second quarter, down 22% from a year earlier. The company said it intentionally limited output to prepare for its 2026 model year rollout and the upcoming R2 SUV launch. Earlier this year, Rivian cut its 2025 delivery forecast to between 40,000 and 46,000 vehicles, down from the previously expected 46,000 to 51,000. Higher U.S. tariffs have increased production costs and weighed on consumer demand, the company noted.
To integrate new manufacturing processes ahead of the R2 launch, Rivian temporarily halted production for a week during the quarter and plans another pause in the second half of 2025. And there’s another challenge looming: the $7,500 federal EV tax credit is set to expire at the end of September. This incentive has been a key driver of EV sales, but once it lapses, Rivian and its peers could face a sharp drop in demand. Still, analysts expect a flurry of third-quarter sales as customers rush to take advantage of the credit before it disappears.
Despite these headwinds, Rivian managed to report second-quarter revenue of $1.3 billion, slightly above analyst expectations, and ended the quarter with $4.81 billion in cash and cash equivalents—up from $4.69 billion at the end of the first quarter. Yet, the company’s path forward is anything but smooth, as it navigates the choppy waters of supply chain pressures, waning regulatory credit sales, and shifting trade policies.
As the rare earths chessboard is redrawn, the outcome will shape not just the fortunes of miners and automakers, but the trajectory of the global energy transition itself. The coming months will reveal whether India and Australia can turn their strategic partnership into a true counterweight to China’s dominance—or whether the world’s dependence on a single supplier will prove too difficult to break.
