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The recent agreement between the United States and Australia to invest $3 billion in critical minerals and rare earths projects represents a significant step in the Western effort to reduce dependency on China for strategically vital resources.
While the deal has been heralded by Washington as a turning point in global supply diversification, a closer examination suggests that China’s entrenched dominance in rare earth mining, refining, and magnet manufacturing will remain largely unchallenged in the foreseeable future.

This analysis situates the agreement within the broader geopolitical and economic context of resource security, outlines its potential and limitations, and assesses its implications for the evolving balance of power in the Indo-Pacific region.

Rare Earths and Strategic Dependence

Rare earth elements (REEs) are indispensable for modern technology spanning clean energy, defence systems, electric vehicles, and semiconductors. Despite their name, REEs are relatively abundant in the Earth’s crust; their scarcity lies in the technically complex, costly, and environmentally damaging refining process.

Over the past three decades, China has systematically consolidated control over this value chain, developing low-cost refining and magnet production capabilities that now underpin 90% of global processing capacity, 69% of mining, and 98% of magnet manufacturing (Goldman Sachs, 2024).

This dominance has translated into a form of strategic leverage. Beijing has repeatedly demonstrated its ability to weaponize resource supply chains, most recently through export curbs on gallium, graphite, and rare earth magnets, heightening Western concerns about supply security and industrial resilience.

The United States and its allies, including Japan, Australia, and the European Union, have consequently prioritized critical mineral diversification as a matter of both economic sovereignty and national security.

Key Issues:

Technological Dependence:
Western economies lack refining and magnet manufacturing infrastructure comparable to China’s mature ecosystem, which benefits from decades of state investment and technological standardization.

Environmental and Regulatory Constraints:
High environmental standards, community opposition, and lengthy approval timelines in the U.S. and Australia increase project costs and delay production, deterring private investment.

Market Distortion by State Subsidies:
Chinese producers benefit from state-backed financing, subsidized energy, and vertically integrated industrial networks that suppress global prices, making it difficult for Western firms to compete without government intervention.

Investor and Consumer Behavior:
Global manufacturers continue to prioritize low-cost Chinese supply, perpetuating dependency despite policy rhetoric about diversification.

Geopolitical Fragmentation:
Efforts to “de-risk” supply chains are hindered by divergent national strategies among Western allies, with varying levels of commitment to resource security versus environmental and economic priorities.

The U.S.-Australia Critical Minerals Pact

On October 20, 2025, President Donald Trump announced a joint U.S.-Australia agreement committing $3 billion to the exploration, mining, and processing of critical minerals.
The pact includes provisions for a price floor a mechanism designed to ensure profitability for Western miners operating in markets distorted by Chinese state subsidies and environmental cost advantages.

According to the White House, U.S. investments will “unlock deposits worth over $53 billion” in Australian reserves. The U.S. Export-Import Bank (EXIM) has issued seven Letters of Interest totaling $2.2 billion to Australian mining firms, including Arafura Rare Earths, developer of the Nolans project in Western Australia.

While these measures indicate a serious financial commitment, they also highlight the industrial asymmetry between emerging Western projects and China’s mature, vertically integrated supply chains.

Economic Feasibility and Industry Timelines

Industry experts have expressed caution regarding the feasibility of rapid supply diversification.
Barrenjoey analyst Dan Morgan noted that the “time frame for various projects to be ready even by 2027 would be heroic,” reflecting the inherent capital intensity and regulatory delays in rare earth development.

Similarly, Dylan Kelly of Terra Capital observed that the current pricing of NdPr oxide the most traded rare earth compound “does not reflect a market dynamic that can sustain a significant fall in prices,” implying that a price floor mechanism may be essential for commercial viability.

Such perspectives underline the structural constraint that industrial policy cannot compress geological and technological timelines. New rare earth projects require multi-year investments in exploration, environmental clearance, and processing technology transfer.

Strategic and Geopolitical Dimensions

The U.S.-Australia pact is emblematic of a broader strategic realignment in the Indo-Pacific, wherein critical minerals are increasingly framed not merely as commodities but as strategic enablers of power projection.
For Washington, the deal aligns with its economic security agenda to “de-risk” supply chains and reduce China’s capacity to use resource dependencies as geopolitical tools.

For Canberra, it represents both an economic opportunity and a strategic burden. Australia possesses abundant mineral reserves but faces pressure to align its export policies with U.S. strategic interests, potentially straining its trade relations with China still its largest trading partner.

At a deeper level, the agreement signals the emergence of a critical minerals bloc, mirroring patterns seen in energy geopolitics. Yet, the absence of comparable refining infrastructure, skilled labor pools, and environmental cost advantages continues to limit Western competitiveness.

Market Reactions and Corporate Beneficiaries

The deal has already produced identifiable commercial winners.
Arafura Rare Earths and Syrah Resources have reported increased investor interest following the announcement, reflecting market confidence in Western government-backed financing.
Arafura’s CFO, Peter Sherrington, emphasized that the U.S.-Australia initiative “de-risks raising money from an equity perspective,” while its CEO projected full project funding by early 2026.

However, as Syrah CEO Shaun Verner noted, unless global consumers “cure their addiction to lowest-cost supply from China,” even well-financed Western projects will struggle to secure stable demand. This underscores a behavioral dimension of market dependency, wherein private-sector procurement patterns perpetuate Chinese dominance despite political rhetoric of diversification.

Implications for Global Resource Governance

In the short term, the U.S.-Australia agreement is unlikely to materially alter the global rare earth landscape.
China’s entrenched advantages in scale, technology, and regulatory flexibility will ensure continued dominance through the decade.
Nevertheless, the pact marks an important symbolic and structural step toward building alternative supply chains, particularly if accompanied by coordinated policies on processing technology, environmental standards, and market access.

In the medium to long term, such agreements could catalyze a Western-led industrial ecosystem, reducing strategic vulnerability and fostering innovation in cleaner extraction methods. However, success will depend on sustained political will, technological breakthroughs, and a willingness to absorb short-term economic inefficiencies for long-term security gains.

Analysis: Strategic Patience Over Political Rhetoric

The U.S.-Australia rare earths pact represents a strategically coherent but operationally constrained response to China’s resource hegemony. It reflects the increasing securitization of economic policy in an era of great-power competition.

Yet, as this analysis indicates, the pathway to rare earth independence will be long, capital-intensive, and geopolitically fraught.
While the agreement sends a strong signal of Western resolve, the transformation of intent into industrial capability will take years, not electoral cycles.

Until then, China’s dominance will persist not simply because of its mineral reserves, but due to its unparalleled integration of industrial policy, technological expertise, and geopolitical strategy.

With information from Reuters.

More than 80,000 police have been deployed as demonstrators rally against Macron’s government and austerity policies.

French police have arrested hundreds of people as protests led by left-wing forces under the label “Block Everything” were launched across the country.

More than 200 people were reported to have been arrested in the morning hours as demonstrators set fire to rubbish bins and blocked highways, spurred by frustration with President Emmanuel Macron’s government amid a national political crisis.

The 80,000 police deployed across the nation responded with bouts of tear gas and detainments.

The demonstrations – part of a grassroots movement called “Bloquons Tout” or “Block Everything” – sought to use work strikes, blockades and other acts of defiance to express long-simmering anger over the government and its austerity measures.

Interior Minister Bruno Retailleau reported that a bus was set on fire in the western city of Rennes and that damage to a power line had blocked trains in the southwest. However, the protests initially appeared more tame than previous bouts of unrest against Macron’s leadership.

The plan to “block everything” emerged after former Prime Minister Francois Bayrou lost a confidence vote on Monday and Macron named close ally, Defence Minister Sebastien Lecornu, to replace him.

He is France’s fifth premier in less than two years, and the fourth in 12 months.

Florent, a protester in Lyon, told the AFP news agency that Macron’s decision to appoint his close ally to the top job “is a slap in the face”.

“We are tired of his successive governments; we need change,” he said.

The Block Everything movement, which has gone viral on social media, has been fuelled by increased dismay over budget-tightening policies that Bayrou championed, as well as broader concerns with poverty and inequality, which have risen sharply in recent years, according to France’s statistics bureau.

Its spontaneity is reminiscent of the “Yellow Vest” movement that rocked Macron’s first term as president, when yellow-clad protesters across the nation challenged rising fuel prices and pro-business policies for weeks on end in protests that became increasingly violent.

United States President Donald Trump has announced new measures that tightened his grip on security in Washington, DC, a day after National Guard troops began carrying weapons in the US capital.

Earlier this month, Trump ordered the deployment of the National Guard, who now number more than 2,200, as part of what he has billed as a crackdown on allegedly out-of-control crime in the city.

On Monday, Trump ordered Defense Secretary Pete Hegseth to set up a specialised unit within Washington’s National Guard “dedicated to ensuring public safety and order in the nation’s capital”.

In the same executive order, Trump directed the hiring of additional US Park Police personnel in the city, as well as more prosecutors to focus on litigating violent and property crimes.

Trump also took aim at cashless bail in a separate order and told law enforcement that anyone arrested should be held in federal custody “to the fullest extent permissible”, and federal charges should be pursued against them.

The previous day, National Guard troops in Washington, DC began carrying their service-issued weapons, the US military said, noting they are only authorised to use force as a last resort.

The National Guard forces in the capital are from overwhelmingly Democratic-voting Washington, DC, as well as the Republican-led states of West Virginia, South Carolina, Ohio, Mississippi, Louisiana and Tennessee.

Federal law enforcement personnel, including Immigration and Customs Enforcement, have also increased their presence on the capital’s streets, drawing protests from some residents.

Southern Europe is battling deadly wildfires and extreme heat this week, with record temperatures and dry conditions forcing evacuations across France, Spain and Portugal.

An enormous wildfire in southern France’s Aude region has killed one person, injured nine others, marking the country’s largest wildfire this season.

The blaze, which erupted on Tuesday, has already scorched at least 15,000 hectares (37,000 acres) – an area larger than the city of Paris – in less than 24 hours. Fires have consumed forests, ravaged villages and damaged or destroyed at least 25 homes, with emergency officials warning that the blaze remains out of control.

“All of the nation’s resources are mobilised,” President Emmanuel Macron said in a post on X, urging people to act with “the utmost caution”.

More than 1,800 firefighters have been sent to battle the flames, backed by 600 vehicles and water-dropping aircraft.

“We have at our disposal in the Aude department the maximum number of personnel and resources that we can have in the south of France in its entirety,” said Remi Recio, deputy prefect of Narbonne.

An elderly woman who refused to evacuate was killed, while another person is missing. Two civilians were injured, including one in critical condition with burns, and seven firefighters suffered smoke inhalation.

Camping grounds and at least one village were partially evacuated, and roads were closed. “I left everything behind me,” said David Cerdan, 51, who fled the village of Saint-Laurent-de-la-Cabrerisse. “I’m putting it into perspective. I only have material damage.”

Officials say the fire has already consumed as much land as all French wildfires in 2024 combined – more than double that of 2023. “The fire is advancing in an area where all the conditions are ripe for it to progress,” said fire official Roesch. “This fire will keep us busy for several days. It’s a long-term operation.”

An investigation into the cause is under way. France’s environment ministry said drought conditions and dry vegetation contributed to the spread, with water restrictions already in place in the Aude region.

“The risk of fire is greatest in the Mediterranean,” said climate and agriculture analyst Serge Zaka. “In France, it is the hottest and driest area. But with climate change, these fire risks are expected to become more significant during the summer.”

Last month, a blaze near Marseille injured about 300 people. Scientists warn that climate change is driving more intense heat and dryness across Europe, the world’s fastest-warming continent.

Spain and Portugal face heat-driven blazes

In Spain, a prolonged heatwave since Sunday – with temperatures reaching 43C (109F) – has helped fan multiple wildfires across the country.

The resort town of Tarifa in Andalusia saw more than 1,500 people and 5,000 vehicles evacuated after a fire broke out near La Pena, a wooded area close to the beach. The fire, believed to have started in a camper van, was rapidly spread by strong winds.

“What concerns us most right now is the wind, whether it shifts between the west and east,” said Antonio Sanz, Andalusia’s interior minister.

Fire crews worked through the night to keep flames away from hotels and tourist accommodation, but the blaze remains active, and residents have not been allowed to return.

Elsewhere, a fire near Ponteceso in the Galicia region forced the evacuation of Corme Aldea village. In Cadiz, a blaze that erupted Tuesday led to mass evacuations, according to state broadcaster RTVE.

The Spanish meteorological agency AEMET has issued orange alerts across several regions through Friday. Civil protection authorities warn of “high” or “extreme” fire risk in much of the country.

Spain’s Ministry of Health reported 1,060 excess deaths linked to extreme heat in July, a 57 percent increase over the same month last year, based on data from the national mortality monitoring system. While the data does not confirm direct causation, it is widely used to estimate heat-related deaths.

In neighbouring Portugal, wildfires have already burned more than 42,000 hectares (104,000 acres) in 2025 – the largest area since 2022 and eight times more than this time last year. More than half of that land was scorched in just the past two weeks.

Firefighters managed to bring a large blaze under control near Vila Real in the north on Wednesday, but others remain active. A fire in the city of Amarante continued to burn, while another in A Coruna reached emergency level 2 due to its proximity to populated areas.

Lisbon declared a state of alert until August 7, with more than 100 municipalities on maximum fire risk amid soaring temperatures.

Scientists say Southern Europe is on the front line of climate breakdown. Rising global temperatures are creating the conditions for longer and more destructive fire seasons.