The United States and Australia have finalised a landmark agreement to boost supplies of rare earth elements and critical minerals to reduce global reliance on China’s dominance.
Signed by President Donald Trump and Australian Prime Minister Anthony Albanese, the pact commits $8.5 billion over six months to expand mining, processing, and refining capabilities in both countries.
Australia, with its abundant mineral reserves and mining expertise, plays a key role in diversifying supply sources important for technology, defence, and clean energy sectors.
The deal includes joint investments in projects like the Alcoa-Sojitz Gallium Recovery and Arafura Nolans Rare Earths, which together would supply a significant share of global demand.
China controls about 60-70% of rare earth mining and over 90% of processing, recently tightening export controls to maintain leverage amid geopolitical tensions. A spokesperson from China’s Ministry of Foreign Affairs urged resource-rich countries to adopt a “proactive role” in securing stable supply chains while maintaining trade cooperation.
The Western automotive and electronics industries have raised concerns over China’s export limits, warning of potential supply disruptions. Financial firms note that even a small disruption could cause substantial economic losses and inflation.
The framework also aims to accelerate regulatory approvals, promote recycling technologies, and establish a U.S.-Australia Critical Minerals Supply Security Response Group to coordinate supply chain resilience efforts.
Market reactions were mixed, with some Australian mining stocks falling after early gains and U.S. rare earth shares slipping modestly.