US, Australia ink rare earth agreement to oppose China’s dominance
(MENAFN) The United States and Australia have signed an agreement to strengthen supplies of rare earths and other critical minerals, aiming to counter China’s dominance in the sector.
Australian Prime Minister Anthony Albanese said the deal will support a pipeline of $8.5 billion (A$13 billion; £6.3 billion) in “ready-to-go” projects to expand Australia’s mining and processing capacity. According to the framework, $1 billion will be invested jointly by the two countries in projects across the US and Australia over the next six months.
The two nations have been discussing these issues since Trump’s first term, but Albanese said the new agreement elevates the partnership to the “next level.”
On Monday, US President Donald Trump also addressed Australia’s multi-billion-dollar submarine deal with the US and UK, known as Aukus, saying it was “full steam ahead.” Earlier this year, the deal faced scrutiny after the Trump administration announced a review to ensure alignment with its “America First” agenda, raising concerns over Australia’s access to US submarines. When asked, Trump confirmed, “Oh no, they're getting them.”
China currently controls roughly 70% of rare earths mining and 90% of processing, materials crucial for defense equipment, computer chips, and vehicles. US companies’ reliance on these resources has created vulnerabilities, particularly as China has restricted access amid tariffs and rising tensions.
Following the announcement, shares in Australian rare earths producers rose sharply. Perth-based Arafura Rare Earths jumped about 7.7%, while Iluka Resources gained more than 3%.
Albanese said the agreement will accelerate investment in three types of projects, including US funding for processing facilities in Australia. Both countries also agreed to collaborate on pricing, permitting, and government oversight of company and project sales in the sector.
Additionally, the US plans to invest in a 100 tonnes-per-year advanced gallium refinery in Western Australia and will provide approximately $2.2 billion in financing through the Export-Import Bank to support critical minerals projects. Recent US investments in firms like MP Materials, Trilogy Metals, and Lithium Americas have included equity stakes in exchange for financial support.
Shares in Australian companies such as Lynas Rare Earths had already surged in anticipation of increased US backing. Lynas, awarded a contract by the US Defense Department, is also developing a project in Texas.
The White House’s framework provided limited details, reflecting the sensitivity of the issues. While Australia is a major source of critical minerals, both it and the US still depend on China for processing capabilities needed to turn raw materials into usable products.
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