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US and Australia Sign Rare Earths Deal to Reduce China’s Market Control
The United States and Australia have signed a new agreement aimed at strengthening global supply chains for rare earth elements and other critical minerals, in a move to reduce dependence on China, which currently dominates the market.
The deal, signed in Washington, D.C., brings together both nations in a strategic effort to invest in mining, processing, and infrastructure development. It supports a pipeline of $8.5 billion in Australian mining projects and includes a joint investment of $1 billion over the next six months in both countries.
Countering China’s Dominance
China controls approximately 70% of global rare earths mining and 90% of processing, making countries like the US and Australia heavily reliant on its supply. These minerals are essential for a wide range of industries, including defense systems, semiconductors, electric vehicles, and clean energy technology.
Recent export restrictions by China, in response to US tariffs and trade tensions, have highlighted the vulnerability of Western supply chains. The US and Australia now aim to diversify their sources and capabilities to secure long-term access to these vital materials.
Key Investments and Agreements
Australian Prime Minister Anthony Albanese emphasized that the deal will take the bilateral partnership to the “next level.” Among the planned initiatives:
- Construction of a 100-tonnes-per-year advanced gallium refinery in Western Australia
- $2.2 billion in funding from the US Export-Import Bank to support critical minerals projects
- Joint efforts to streamline permitting, improve pricing transparency, and coordinate foreign investment reviews
The US has already begun investing in North American and domestic projects, including companies like MP Materials, Trilogy Metals, and Lithium Americas, gaining partial ownership in return.
Market Impact and Industry Response
News of the deal has positively affected stocks in the rare earth sector. Shares of Lynas Rare Earths, a key Australian mining firm, surged following the announcement. Lynas is already working on a US-based facility in Texas under a contract with the US Department of Defense.
Though the framework document released by the White House was light on details, the agreement signals a strong commitment to building resilient supply chains independent of Chinese control.
Long-Term Strategy
Australia remains a major supplier of raw critical minerals. However, like the US, it currently lacks domestic processing capabilities and still depends on China to refine those materials into usable industrial products. This deal marks a step forward in reducing that dependency and ensuring energy and technological security for both nations.
