Australia is formulating a plan for its critical minerals reserve that will focus on sales of future production, limiting the need for a physical stockpile, industry sources said, as Australian and US leaders prepare to meet next week.

Australia's critical minerals task force hosted a call last week with miners and project developers across a range of metals as it steps up industry consultations, according to four sources familiar with the matter.

The task force is seeking by the end of the year to have finalised its policy recommendations for the structure of a A$1.2-billion stockpile of minerals that it believes is vulnerable to supply disruption. The stockpile, which is expected to focus on rare earths, is expected to be ready by the second half of 2026.

Reuters previously reported that Australia was willing to sell shares in its reserve to allies, including Britain.

The push comes as Australia seeks to leverage its strategic importance as a key supplier to its allies ahead of a meeting between Prime Minister Anthony Albanese and US President Donald Trump in Washington on October 20. Australia's resource and trade ministries declined to comment.

Last week, Beijing tightened export restrictions on rare earths ahead of talks between Trump and Chinese President Xi Jinping at the end of the month. China produces more than 90% of the world's processed rare earths and rare earth magnets and has used export restrictions to throttle shipments, amplifying global concerns about supply chain vulnerabilities.

"We've got vast resources of the critical minerals that the world is going to need to decarbonise, to build data centres, to process AI," Trade Mnister Don Farrell told Australian broadcaster ABC on Sunday.

"We need to have a broad range of customers, firstly to provide us with the capital to extract the products, but secondly, to ensure that we've got guaranteed markets to sell these critical minerals," he said.

"We've been talking to the Europeans ... the Japanese, the Koreans and of course we're talking with the Americans."

'LISTEN MODE'

According to the sources, government officials are eager to show that they are in "listen mode." One person said that companies have been asked to make written submissions.

Rather than stockpiling critical metals, participating governments would agree on annual supplies for future years and miners would sell those metals directly to consumers. The volume of that supply would then be deducted from the amount owed under a bilateral deal.

"It’s more like a financial instrument than a physical stockpile," one of the sources said.

Australian officials have yet to determine how risks will be managed for smaller markets like heavy rare earths, where most of the world's prices are tied to a China-based index that Western developers say is artificially set too low.

Earlier this year, the US government offered a multibillion-dollar deal to support its flagship rare earths producer, MP Materials MP.N, which included a minimum price that buyers must pay.

Australia has said it is considering a similar plan, but sources said it would seek to reduce its financial exposure.

"In an ideal world, Australia doesn't spend any money and acts more like a facilitator, so the other (consumer) countries are underwriting a floor price," a source said.

Another idea that is circulating would have Australia contributing trades or material to back a "functioning Western price index," one source said. Another source said this idea was unlikely to work because the market size was too small to be liquid.