US-Australia Critical Minerals Agreement
US President Donald Trump and Australian Prime Minister Anthony Albanese signed a significant agreement to counter China's dominance in rare earth supply chains.
Financial Commitments and Projects
- The US and Australia have committed at least $1 billion towards an $8.5 billion pipeline of mining and processing projects over the next six months.
- Australia announced financial commitments in two priority critical minerals projects:
- Alcoa-Sojitz Gallium Recovery Project: Located in Wagerup, Western Australia, aims to meet 10% of the global gallium supply. Australia will invest up to US$200 million, and the US will have an ownership stake. Japan is also a project partner.
- Arafura Nolans Project: Situated in the Northern Territory, Australia, with an equity investment of US$100 million, expected to produce 5% of global rare earths.
Global Context of Rare Earths
- Rare earth elements (REEs) are crucial in technology sectors like defense, semiconductors, mobile phones, and electric vehicles.
- China holds a dominant position in rare earth production, supplying 85-95% of global demand.
- China's policies have restricted rare earth exports in the past to exert global influence.
Strategic Moves by the US
- The US has taken steps to resume rare earth production, including investments in mines in California and Wyoming.
- An agreement with Ukraine was signed for preferential access to critical mineral reserves.
AUKUS Agreement
- The US and Australia are on track to honor the A$368 billion AUKUS agreement, involving the purchase of nuclear-powered submarines from the US.
- Concerns about American shipyard capacities were raised, but Trump downplayed these as minor details.