US and Australia Strengthen Alliance with Rare Earths Deal to Tackle China

Wed Oct 22 2025 05:32:34 GMT+0300 (Eastern European Summer Time)

In a strategic move aimed at diminishing China's market dominance, the US and Australia have entered into a significant deal that focuses on enhancing supplies of rare earths and critical minerals. This partnership is set to boost investment in mining and processing projects.

The latest agreement between the US and Australia is aimed at bolstering supplies of rare earths, essential for various industries including defense and technology. The deal, valued at $8.5bn, includes a $1bn investment over six months and emphasizes Australian mining capabilities, with the goal of reducing dependence on China, which currently dominates the market.

The US and Australia have signed a deal intended to boost supplies of rare earths and other critical minerals, as the Trump administration looks for ways to counter China's dominance of the market.

Australian Prime Minister Anthony Albanese said the deal would support a pipeline of $8.5bn (A$13bn; £6.3bn) ready-to-go projects that would expand his country's mining and processing abilities.

It includes $1bn to be invested by the two countries in projects in the US and Australia over the next six months, as outlined in a framework text.

The US and Australia have been collaborating on these issues since Trump's first term, with Albanese stating that the new agreement would elevate the partnership to the next level.

On Monday, US President Donald Trump also commented on Australia's multi-billion dollar submarine deal with the US and UK, known as Aukus, declaring it full steam ahead. Earlier in the year, this deal faced scrutiny as the Trump administration reviewed its alignment with the America First agenda, raising doubts about Australia's capability to secure new submarines.

Currently, China controls approximately 70% of rare earths mining and an overwhelming 90% of the processing of these materials, which are crucial for everything from military equipment to electronics.

US companies have become increasingly reliant on these resources, making them vulnerable to restrictions imposed by China in response to tariffs and other geopolitical tensions.

After the announcement of the rare earths deal, shares in Australian mining firms surged, with Perth-based Arafura Rare Earths rising by about 7.7% and Iluka Resources gaining more than 3%.

Albanese highlighted that the agreement is directed at accelerating investments across multiple project types, including US investments in processing facilities in Australia.

The two nations also agreed to collaborate on pricing, permitting, and regulatory reviews concerning corporate sales within the sector.

In a separate initiative, the US plans to construct a 100 tonnes-per-year advanced gallium refinery in Western Australia and is prepared to offer approximately $2.2bn in financing to support critical minerals projects through its Export-Import Bank.

In recent months, the Trump administration has initiated investments in companies like US rare earths miner MP Materials and others in Canada, acquiring ownership stakes in exchange for financial support.

In anticipation of this deal, stocks for Australian companies like Lynas Rare Earths increased, as Lynas previously secured a contract with the US Defense Department and is developing a project in Texas.

While the framework from the White House was somewhat vague, it indicates the complexities involved in reducing reliance on China, given it remains Australia’s largest trading partner.