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The United States and Australia have signed a strategic agreement to bolster the supply of rare earth elements and other critical minerals, as both nations seek to reduce their reliance on China, which currently dominates the global supply chain in this sector.
According to Australian Prime Minister Anthony Albanese, the agreement will support an $8.5 billion investment package (approximately 13 billion AUD) for “shovel-ready” projects, focusing on expanding domestic mining and processing capabilities. Additionally, the two countries plan to invest another $1 billion in projects within the U.S. and Australia over the next six months.
This agreement marks a significant advancement in the bilateral partnership established during the first term of U.S. President Donald Trump, aimed at securing strategic mineral supplies for defense, renewable energy, and high-tech industries.
China currently controls about 70% of global rare earth mining and up to 90% of processing capacity—critical materials for manufacturing semiconductors, electric vehicles, and defense equipment. Beijing’s recent export restrictions have left many U.S. companies vulnerable amid escalating trade tensions.
Following the announcement, shares of Australian mining companies surged. Arafura Rare Earths climbed 7.7%, while Iluka Resources rose over 3%. Previously, Lynas Rare Earths, a major Australian producer, secured a U.S. Department of Defense contract to build a processing facility in Texas.
In the U.S., the Trump administration announced plans to invest in a state-of-the-art gallium processing plant in Western Australia, with a capacity of 100 tons annually, and provide a $2.2 billion grant through the Export-Import Bank to advance critical mineral projects.
Both nations have pledged to collaborate on licensing, pricing, and investment regulations, enhancing transparency and control over strategic supply chains.
Analysts view this move as a clear effort by Washington and Canberra to establish an independent rare earth supply chain, mitigate geopolitical risks, and strengthen energy security for Western economies.
Australia holds an estimated 5.7 million tons of rare earth reserves, ranking fourth globally and among the largest producers outside China. The country produced 13,000 tons of rare earths in 2024 and plans to increase output by expanding the Mount Weld mine and developing the Yangibana project.
Source: Reuters
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