US and Australia reach agreement on rare earth metals

US President Donald Trump and Australian Prime Minister Anthony Albanese have signed an agreement on cooperation in the field of rare earths and critical minerals. International news agencies reported this on Monday. The presidents emphasized that the cooperation focuses mainly on the processing of minerals.

Not all terms of the agreement have been disclosed yet. But according to Albanese, both countries will each invest $1 billion in joint projects over the next six months. According to him, there would be a total “pipeline” of 8.5 billion dollars (7.9 billion euros), although it is still unclear what exactly that means.

Rare earth metals and critical minerals are of great importance for the defense sector, chip industry and the energy transition. They are used in many technological applications that are essential for the production of aircraft, electric cars, smartphones and laptops, among others.

China’s export restrictions

China has dominated the rare earth metals market for years, introducing export restrictions earlier this month. Foreign exporters must therefore apply for a special export permit from the Chinese government. Trump then said he wanted to investigate how the United States could reduce its dependence on China.

Although Australia has large reserves of rare earth metals, processing them is complex and environmentally harmful. As a result, the country largely exports raw materials to China, which is responsible for about 90 percent of global refining.

Albanese wants to break that dependency: his government provided a loan of 1.2 billion Australian dollars (about 670 million euros) to mining company Iluka for the construction of the first refinery in Western Australia. The country is now trying to convince the United States to also invest in this sector.

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