Can US-Australia rare earth deal loosen China’s grip on critical minerals trade?

A critical minerals framework deal valued at US$8.5 billion between the United States and Australia will allow American buyers to rely less on Chinese rare earth metals, but developing a secure, independent supply chain may take the US 10 to 20 years, according to analysts.

“Deals like this go a long way – this is a good start,” said Pini Althaus, CEO of US-based rare earth metal investor and developer Cove Capital, adding that Beijing would likely grow “more concerned” as the deal matures and if the US signs similar pacts with other countries.

The US-Australia framework represents intensifying efforts to “accelerate the secure supply of critical minerals and rare earths”, the White House said in an announcement on Monday. It added that both sides would mobilise support for capital and operational expenditures, through means such as loans or equity, along with the finalisation of purchases known as “offtake arrangements”.

Within six months, the US and Australia will take measures aimed at providing at least US$1 billion in financing for projects, in each country, that are “expected to generate end product” for buyers in both, the White House said.

US President Donald Trump and Australian Prime Minister Anthony Albanese signed the deal in Washington after five months of talks and two weeks after China expanded controls on exports of its own rare earth elements and related technologies.

The framework agreement will help the US by letting it access Australian critical minerals technology, Althaus said. The CEO added that the deal’s purchasing agreements and “floor prices” would make it more difficult for China to compete on mineral rates.

  

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