The US and Australia have signed a deal intended to boost supplies of rare earths and other critical minerals, as the Trump administration looks for ways to counter China's dominance of the market.
Australian Prime Minister Anthony Albanese announced that the agreement would support a lucrative pipeline of $8.5 billion (£6.3 billion) in 'ready-to-go' projects aimed at enhancing Australia’s mining and processing capabilities.
The deal establishes a $1 billion investment from both nations in projects over the next six months.
This collaborative effort is a continuation of discussions initiated during Trump’s first term, but Albanese emphasized that this latest agreement propels their partnership to the 'next level.'
Currently, China controls about 70% of rare earth mining and 90% of material processing, integral to a broad spectrum of technologies ranging from defense applications to consumer goods.
With US dependence on these materials growing, restrictions imposed by China in response to escalating trade tensions emphasize the urgency of this issue.
Investments will focus on facilitating US ventures in Australian processing facilities while also addressing pricing and regulatory challenges within the sector.
The United States has announced plans to build a 100-tonnes-per-year advanced gallium refinery in Western Australia, alongside offering approximately $2.2 billion in financing to support critical mineral initiatives through the Export-Import Bank.
Recent investments by the Trump administration target companies like MP Materials in the US and others in Canada that engage in extraction and processing, which could lead to significant ownership stakes in these firms.
As the agreement takes shape, partnerships like that of Lynas Rare Earths, which has previously contracted with the US Defense Department and is expanding projects in Texas, stand to benefit significantly.
Nevertheless, the delicate balance of relationships remains crucial as Australia, while a key source of minerals, still relies heavily on China for necessary materials processing—reflecting a complex trade dynamic.
