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While gold and petroleum prices have already been affected by the current Middle East conflict, analysts are also keeping a close eye on whether defence spending will impact the critical minerals and rare earths markets.
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Critmins essential for defence include rare earth elements (REEs), antimony, lithium, cobalt, graphite, titanium, tungsten, and nickel, which are vital for manufacturing missiles, radar, advanced weaponry, and vehicles.
A recent report from S&P Global has suggested global demand from the defence sector is already seeing a dramatic increase in critmins spending.
“NATO member countries have set a goal to increase defence spending to five percent of their GDP by 2035, building on the two percent benchmark established at the 2014 Wales Summit,” the S&P report noted.
“NATO’s commitment to significantly increase defence spending is reshaping demand for the minerals that underpin advanced military systems – from aerospace alloys and electronics to propulsion, sensors, and energy storage.”
NATO has identified 12 defence‑critical minerals, and already nine of those minerals face elevated supply risk. Some analysts have also identified a surge in critical minerals demand by the defence sector as benefiting China and its current rare earth element (REE) dominance.
The Reserve Bank of Australia, meanwhile, says critical minerals are vulnerable to supply shortages due to a combination of factors.
“While it is possible that demand for critical minerals could grow rapidly, supply is largely fixed in the short run because it takes a long time to develop mines. It can take critical mineral projects more than 10 years to go from the exploration to the production stage, though this time period can vary by mineral and price incentives,” the RBA noted in a recent report shared in October CY25.
For its part, the Australian governments are ramping up their support for a local critical minerals sector. Particularly, the Minerals Council of Australia has welcomed Victoria’s plans for antimony processing, but has called for even more.
Antimony is a critical strategic mineral essential for defence, primarily used to harden lead in armour-piercing ammunition, tracer bullets, and specialised solders.
State MCA executive director, James Sorahan, said Victoria is the only State currently producing antimony, offering huge potential to supply expanding global markets with a significant quantity of this critical mineral by developing a processing hub.
“Victoria has the resources, so it needs the right policy settings to get mines up and running,” Mr Sorahan explained recently.
He continued: “Bringing geology back into the VCE curriculum and reducing Victoria’s punishing royalty rates will help get mines developed, along with reducing mining approval timeframes, better road, rail and port infrastructure and building a pipeline of skills from schools to universities.”
Meanwhile, Australia’s resources minister, Madeline King, said a recent stocktake has reinforced the nation’s strength in critical minerals. The minister said the latest data highlights Australia’s world-class geological endowment and the strength of the nation’s resources sector.
“Australia’s diverse geology and abundant mineral resources continue to underpin our economic and national security while supporting secure global supply chains with our strategic partners,” she said.
“Critical minerals and rare earth elements are vital to high technology manufacturing, defence applications, and clean energy technologies such as solar panels, wind turbines and electric vehicles.”
The stocktake confirmed Australia retained its number one global ranking for resources of gold, iron ore, lead, rutile, uranium, vanadium, zinc, and zircon and added ilmenite.
Production used for hard steels increased for tungsten by more than 90% and molybdenum by 59%. Australia has the world’s third-largest resources, or REEs, and was also the world’s third-largest producer in CY24.
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