The Association of Mining and Exploration Companies (AMEC) has outlined a proposed framework to the Federal Government for the development of a critical minerals strategic reserve, with a specific focus on rare earths.
AMEC’s proposal centres on what it calls a Rare Earths Production Scheme (REPS), which it positions as the central mechanism for implementing the government’s critical minerals strategic reserve.
The proposed model leverages a contract for difference (CfD) with a price collar to provide targeted support for both heavy and light rare earth projects, while aiming to minimise downside risk for taxpayers.
AMEC said the REPS model is similar to the Capacity Investment Scheme used in the renewable energy sector, in that it seeks to derisk investment for both government and industry. The scheme is also focused on rare earths required for magnet production, reflecting the scale and targeted nature of the proposed funding.
AMEC chief executive officer Warren Pearce said the paper, titled Design Paper for Australia’s Critical Minerals Strategic Reserve, brings together industry expertise to provide government with an informed perspective on how best to implement and operate a reserve.
“The government went to industry and asked for options and the best practical model for the establishment of a critical minerals reserve,” Pearce said.
“Our recommended model centres around rare earths and provides a mechanism that meets the objectives of government, supports the growth of rare earth projects in Australia, and minimises risks to taxpayers.”
Under the proposal, the CfD with a price collar would provide price certainty for rare earth producers during periods of market volatility, while limiting downside risk for taxpayers. When prices fall below an agreed floor, support would be provided, while prices exceeding an agreed ceiling would see the government share in the upside.
AMEC said the REPS model is designed to be fiscally sustainable by capping government exposure and using competitive tender and reverse auction processes to minimise support costs. Unlike uncapped price support models, the scheme includes mechanisms that allow the government to recover value when prices are strong, ensuring public funds are used efficiently and responsibly.
The Federal Government committed to establishing a Critical Minerals Strategic Reserve in April 2025 to maximise the strategic value of Australia’s critical minerals.
A total of $1.2 billion was allocated to establish the reserve in the 2025–26 federal budget. A taskforce has been established within the Department of the Prime Minister and Cabinet to support development of the reserve, which is expected to be operational from the second half of 2026.
AMEC said it worked with 10 rare earth developers and commissioned Mandala Consulting to prepare the report.
The association said it will continue working with government and industry to refine delivery, governance and eligibility settings to ensure the reserve supports commercially viable projects, strengthens sovereign capability and aligns with the government’s broader Future Made in Australia agenda.
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