Can a U.S.-Australia Partnership Shake China’s Grip on Rare Earths?
Australia’s got reserves and mining expertise, and the United States is eager to invest in alternatives to China. But building mines, refineries and factories could take years.
Australia digs a lot of things out of its vast land mass — the country’s map might as well be the periodic table, its ambassador to the United States likes to say.
That includes the rare earth metals that now are at the center of escalating trade tensions between Washington and Beijing. China dominates the mining and supply of the minerals, which are critical for most modern industries including renewable energy, car manufacturing and defense.
On Monday, President Trump and Prime Minister Anthony Albanese of Australia announced an agreement between their countries, which are longstanding allies, to pour billions of dollars into joint ventures on critical minerals, including rare earths. Their goal is to shake China’s vise grip on the global supply of those metals.
Here is how the partnership could shift the picture on the global trade on rare earths.
Why Australia?
Australia is estimated to have at least five percent of the world’s reserves of rare earths and accounts for roughly 8 percent of global production.
But the tricky part with these elements is less about digging them out of the ground, and more about the technological capacity to process them and the environmental degradation the process can entail, if not done carefully. They occur in low concentrations, and are chemically challenging to isolate.
And despite being essential, the metals are needed in very small quantities. That makes it less likely to be economically viable for private companies to invest in developing the expertise needed for their production.
What Australia does have is a robust mining sector, one of the main drivers of its economy, and the expertise and industry built around it. Australia has 89 active rare earth exploration projects, far more than any other country, according to the Center for Strategic and International Studies.
How soon could we see results?
President Trump said on Monday that in a year’s time, “We’ll have so much critical minerals and rare earths that you won’t know what to do with them.”
But finding geological deposits of rare earths is just the start.
Obtaining permits for a new mine is often time-consuming, and then building a mine can take several years. Setting up a refinery to separate rare earths from ore also takes years. Then comes a period of gradually mastering the extremely difficult chemical processes required for separation.
In the agreement announced Monday, the U.S. and Australian governments said they would each invest $1 billion in the next six months toward creating a pipeline of critical mineral projects in both countries.
Mr. Albanese’s office announced financial commitments in two projects on Australian shores. One is a rare earths mine in the Northern Territory that his office said would contribute up to five percent of global supply. The other is an investment in a gallium project in Western Australia, expected to eventually produce a tenth of the world’s supply of the metal, which is used in specialized semiconductors needed for transmitting data along fiber optic lines.
The agreement also says the governments will intervene if projects are not commercially viable. China has in the past flooded the global market with rare earths to drive down prices and drive competitors in other countries out of business.
How will this figure into geopolitics?
Australia is one of America’s closest allies and collaborating on countering China’s dominance in rare earths will draw them closer together. The future of that relationship has appeared less than solid in recent months, with a president in the White House who has wavered between skepticism and outright disdain for allies. Mr. Albanese’s office said the agreement with Washington was not legally binding or enforceable.
At the same time, Australia’s economy remains incontrovertibly tethered to China, which buys a third of all its exports, mainly iron ore and coal but also agricultural products like wine and beef. Its mining sector is even more enmeshed with Beijing, which accounts for three-quarters of Australia’s iron ore exports.
Last month, Chinese state media warned Canberra over its security cooperation with the United States, saying it will not tolerate “infringements on its core interests.”
Keith Bradsher contributed reporting.
Victoria Kim is the Australia correspondent for The New York Times, based in Sydney, covering Australia, New Zealand and the broader Pacific region.
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