How Aussie miners like Arufura, Iluka and Lynas are powering the AI boom

The AI revolution isn’t just about GPUs and data centers, it also depends on the raw materials that makes it happen. With an abundance of rare earths and critical minerals, Australia sits at the foundation of the modern technology ecosystem. This creates opportunities for investors seeking exposure to the global AI and semiconductor boom. Both indirectly through Australia’s resources sector, or directly via global technology leaders that transform those materials into innovation.

Recently, President Donald Trump signed an agreement with Australian Prime Minister Anthony Albanese to boost critical minerals cooperation, including rare earths, as the US aims to decrease its reliance on China. The deal begins with a $1 billion investment, cofunding the construction of an advanced gallium refinery in Western Australia; a key material for semiconductors, accounting for nearly half of global production. Shares of Alcoa Corporation (ASX: AAI) rose 8.5% following the announcement.

Source: CRU Group[rl1]

From smartphones to satellites, the global economy runs on rare earths. These elements are crucial for several technologies such as semiconductors, battery electrodes, magnets, catalysts etc. Yet, production remains heavily concentrated in just a few countries. China, the leading producer, accounts for nearly 70 percent of global output. This concentration has left many technology focussed companies exposed to supply shocks.

Source: Statista as at 2024

China remains dominant, but the US Australia alliance aims to diversify and secure alternative supply chains. The deal represents a push for the US to strengthen its allies and minimise potential leverage by the Chinese government in trade negotiations.

Australia’s advantage extends well beyond gallium. The country ranks amongst the world’s top producers of lithium, nickel, cobalt, and other minerals that are essential to AI, EVs, renewable energy infrastructure and advanced defence systems. According to Australian Critical Minerals, Australia produces 14 of the 31 critical minerals essential for modern technology and renewable energy. With at least 4 percent of the world’s rare earth’s element reserves and global production of lithium and bauxite as high as 49% and 26% respectively.

Source: Australian Government Geoscience Australia

Several Australian projects are already shaping this new reality. Companies such as Arafura Rare Earth (ASX: ARU), lluka Resources (ASX: ILU ), Lynas Rare Earths (ASX: LYC) have all been beneficiaries of the AI adoption and demand for advanced materials. The demand for gallium, neodymium, and lithium are expected to increase significantly over the next decade. Driven by AI hardware, EV adoption, and the renewable energy transition.

These developments position Australia as a strategic supplier to US and global technology manufacturers. Feeding the same supply chains that power today’s leading semiconductor and AI firms.

For investors, these trends represent two sides of the same opportunity. Australia supplies the inputs, essential for next generation technologies. US companies capture the innovation premium; designing and producing the chips, hardware, and software that drive AI adoption.

Source: Grand View Research

ETFs like the ETFS US Technology ETF (CBOE: WWW) provide exposure to these global technology leaders. Including semiconductor producers, cloud computing providers, and AI platform companies. While Australia’s resources underpin the supply side of the AI revolution, WWW offers access to the demand side, the companies building and scaling the AI economy.

In a world increasingly defined by AI and technological innovation, Australia has quietly positioned itself as a linchpin in the supply chain. From the remote outback mines to the chips that power modern day life, the nation’s resources are more than just commodities. They are the foundation of tomorrow’s technology economy. For investors, this convergence of geopolitics, technology, and natural resources highlights how Australia enables the AI story and global technology ETFs like WWW allow participation in its growth.