Australia and the US have been in discussions to form a rare earths joint action plan to open up what has become a concentrated market that's dominated by China.
Rare earths are metals and alloys that are used in many modern day devices such as rechargeable batteries, mobile phones and catalytic converters.
Australian Resources Minister Matt Canavan says there is no doubt Chinese producers are seeking to protect their market position "as dominant suppliers do from time to time".
He told Sky News on Sunday that China has also in the past couple of years made various statements that would potentially restrict the supply of rare earths.
Australia has 14 of the 35 rare earths deemed critical to the US.
"We are very lucky in Australia to have a great mineral industry, so we will do our best to establish these markets," Senator Canavan said.
"These are very important to the modern economy."
However, the concentration of these markets do make it very difficult for the private sector to develop rare earths and there are concerns commercial operators could struggle to maintain their position over time.
"The concentration of all these markets could cause a risk to the security and affordability of the the supply of these critical minerals," he said.
The government has supported projects in the past through the likes of the Export Finance Insurance Corporation, providing concessional finance, he said.
The senator said he has also spoken to Australia's counterparts in Japan and Korea on the issue.
"I think there is a good case for worldwide co-operation here to diversify the supply of these minerals," he said.