U.S. and Australia Forge Critical Minerals Partnership with Billions in Investment
A new agreement signed Monday between the United States and Australia aims to bolster critical minerals production and reduce reliance on China, with potential projects valued up to $8.5 billion. The deal, inked during a meeting between President Donald Trump and Australian Prime Minister Anthony Albanese at the White House, focuses on strengthening the supply chain for essential minerals.
Albanese initially stated the agreement includes a combined $1 billion investment from both countries over the next six months for immediately actionable projects. However, a subsequent White House fact sheet detailed a more extensive investment exceeding $3 billion in critical mineral projects within the same timeframe. The fact sheet also announced the Export-Import Bank of the United States will issue letters of interest for over $2.2 billion in financing, potentially unlocking a total of $5 billion in investment. CNBC has sought clarification from the White House regarding the discrepancy in figures.
The partnership will involve three groups of joint projects, including participation from companies like Alcoa. The U.S. will invest in rare earths processing facilities within Australia, and one project will be a collaborative effort involving Australia, the U.S., and Japan.
Specifically, the U.S. will support the construction of a gallium refinery in Western Australia, capable of producing 100 metric tons annually. Alcoa is already exploring the feasibility of a gallium project at its alumina refinery in Western australia, in partnership with Japan, as announced in August.
This agreement comes as the U.S. seeks to lessen its dependence on China, which currently dominates the global rare earths supply chain, particularly in refining and processing. Australia is one of the few nations outside of China with rare earths processing capabilities and is a key U.S. ally.
Trump expressed optimism about the future, stating, “In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them.” He also emphasized the U.S.’s broader strategy to build a diversified supply chain independent of China.
Escalating China-U.S. tensions
The agreement follows recent tensions with China, which announced export controls on rare earths earlier this month, raising the specter of a renewed trade war. Trump has threatened to impose 100% tariffs on Chinese goods starting November 1st, or sooner, if China doesn’t alter its course.
Trump reiterated his willingness to use tariffs as leverage, stating he could also threaten restrictions on other Chinese exports, such as airplanes. He also confirmed plans to meet with Chinese President Xi Jinping in South Korea later this month and intends to visit China early next year.
Despite the tough rhetoric, Trump emphasized his desire for a fair trade deal with China, noting, “We had presidents that allowed china and other countries get away with murder…We’re not going to allow that, but we’re going to have a fair deal.I want to be good to china. I love my relationship with President Xi. We have a great relationship.”
