The United States and Australia have cemented a new partnership through a critical minerals agreement, designed to enhance the supply of rare earths and other vital materials. This strategic alliance, forged amidst growing global trade tensions, aims to lessen dependence on China’s significant influence in the rare earth market.
Australian Prime Minister Anthony Albanese announced that the deal will inject approximately $8.5 billion (£6.3 billion) into projects across Australia, significantly boosting the nation’s mining and processing capabilities. A key component of this initiative includes a $1 billion investment from both countries, to be deployed over the next six months on projects located in both the US and Australia, according to the framework text released.
This collaboration builds upon discussions initiated during the Trump administration. Prime Minister Albanese expressed optimism, stating that the new agreement elevates the existing partnership to an unprecedented level.
Currently, China holds a dominant position in the global market, controlling roughly 70% of rare earth mining and a staggering 90% of the processing for these essential materials. These minerals are crucial components in a wide array of modern technologies, from advanced defense systems to consumer electronics and electric vehicles.
The vulnerability of US industries to potential supply disruptions from China has been highlighted this year, particularly in light of new US tariffs and ongoing geopolitical tensions. This agreement signals a concerted effort by both nations to mitigate such risks and foster greater supply chain resilience.
Albanese detailed that the collaboration will prioritize investments in three key project areas, including crucial US investment in Australian processing facilities. The partnership also extends to coordinated efforts on market-related issues such as pricing mechanisms, streamlined permitting processes, and the regulatory oversight of corporate and project sales within the critical minerals sector.
In a parallel development, the US announced its intention to invest in a new advanced gallium refinery in Western Australia, capable of processing 100 tonnes annually. Furthermore, the US Export-Import Bank is preparing to allocate approximately $2.2 billion to support critical minerals projects, demonstrating a strong commitment to bolstering domestic and allied production.
This initiative follows earlier US investments in American companies like MP Materials, a rare earths miner, as well as Canadian firms Trilogy Metals and Lithium America’s, which have projects within the United States. These investments have often involved the US securing equity stakes in the companies involved.
The details of the White House framework remain somewhat broad, reflecting the complex geopolitical and economic considerations involved. While Australia is a significant source of critical minerals, like the US, it depends on China for the essential processing stages that transform raw materials into usable components for industry. The close economic ties between China and Australia add another layer of complexity to this strategic realignment.
Related News
- China’s economic growth slows as trade tensions with US flare up
- China will soon have a new Five Year Plan. Here’s how they have changed the world so far
- Bankers on edge, a gilded cash room and US blaming China – my week with global finance elite
More from the BBC
- What does Kevin Federline’s upcoming book say about Britney Spears?
- Trump to Australian ambassador: ‘I don’t like you either’
- These confederate statues caused US protests. Knocked down, they’re the centre of a new art show
- US nuclear stockpile agency to lay off hundreds as shutdown continues
- US Supreme Court to consider law barring illegal drug users from owning guns