US and Australia Forge Urgent Rare Earths Deal to Counter China

UPDATE: The United States and Australia have just signed a groundbreaking agreement aimed at enhancing supplies of rare earths and critical minerals, a decisive move to counter China’s overwhelming market dominance. Australian Prime Minister Anthony Albanese announced that this new deal will support a pipeline of $8.5 billion worth of “ready-to-go” projects, significantly bolstering Australia’s mining and processing capabilities.

This urgent partnership includes an initial investment of $1 billion by both nations in critical projects over the next six months. The announcement marks a pivotal moment in the ongoing efforts that began during the Trump administration to secure a reliable supply chain for materials essential for everything from defense systems to consumer electronics.

Currently, China controls approximately 70% of global rare earths mining and a staggering 90% of processing, leaving US companies perilously dependent on these supplies. As China has recently restricted access to these critical minerals amid rising tensions over tariffs, this deal is crucial for mitigating vulnerabilities faced by US industries.

Albanese emphasized that this agreement elevates the US-Australia partnership to the “next level,” focusing on accelerating investments in three specific project types, including the establishment of US processing facilities in Australia. This strategic move aims to enhance the resilience of both economies against potential supply chain disruptions.

The framework also outlines collaborative efforts to address issues like pricing, permitting, and regulatory reviews of companies operating in this vital sector. In a separate commitment, the US plans to invest in a new 100 tonnes-per-year advanced gallium refinery in Western Australia and is preparing to provide around $2.2 billion in financing for critical minerals projects through the Export-Import Bank.

Recent investments have already been announced in companies such as MP Materials, a US rare earths miner, and Trilogy Metals and Lithium Americas in Canada. In exchange for support, the US has acquired ownership stakes in these firms, solidifying its foothold in the market.

Ahead of the deal’s announcement, shares in Australian companies like Lynas Rare Earths surged, reflecting optimism about increased government backing. Lynas, which has previously secured contracts with the US Defense Department, is currently developing a project in Texas.

The agreement’s framework, published by the White House, offers limited specifics, underscoring the sensitive nature of these discussions. While Australia is a significant source of critical minerals, it also relies heavily on China for processing capabilities, making the situation complex. Notably, China remains Australia’s largest trading partner.

As this deal unfolds, industry experts will be closely monitoring its implementation and the potential shifts in global supply chains. The urgency of this agreement cannot be overstated; it represents a critical step in fortifying economic ties between the US and Australia while reducing dependence on China for essential materials.