USAustralian

“Our land abounds in nature’s gifts of beauty, rich and rare. Advance Australia fair.” Australia’s national anthem spells it plainly. The southern land is a trove of critical minerals. In October, US President Donald Trump and Australian Prime Minister Anthony Albanese met in Washington to sign the critical minerals framework agreement, one that shifts the scales against the Chinese critical mineral hegemony.

Introduction

The US$8.5 billion deal strengthens rare earth supply chains outside China, a strategic move for US stakeholders in the South Pacific. Following the deal, Trump assured the US commitment to the AUKUS (Australian, UK, US) security agreement, which Trump claims is “full steam ahead.” US investment in Australian mineral processing facilities is the first in almost a decade, signifying US counterefforts against Chinese rare earth monopolization and confirming Australia’s vital role in the global mineral supply chain.

Investment, Extraction, and Refinement of Australian Minerals

In October, the tightening of mineral export and refinement deals between the US and Southeast Asia was expedited more than ever, leaving Australia, a crucial trading ally to the United States and China, amidst a rare minerals trade war. Effective Immediately after the agreement, $1 billion in US financing will be funneled to Australian and US joint projects in rare earth mining and refinement processes. This comes after the $2 billion copper refinery commitment of Japan to the US and a $117 million AUD commitment to the Malaysian rare earth agreement. With recent Trump Administration deals in Japan, Malaysia, Vietnam, and Cambodia, US efforts to diversify access to critical minerals are clear, with critical negotiations surging to secure a diverse critical mineral network.

Chinese mineral leverage by Xi Jinping has caused a chokehold on global critical mineral supplies, promoting US diversification to remediate vulnerable supply chains. However, critical mineral refinement has not been wholly embraced by other countries in the industry, suggesting the need for refinement capabilities under US-Australian cooperation. China controls 80% of rare earth mineral processing, which will require significant capital investment and environmental regulation. Australia has long been increasing its refinement capabilities but lags in contention with Chinese capabilities.

The influence Beijing wields cannot be disregarded and signals that any trade deals regarding the extraction or refinement of critical minerals in Southeast Asia will trigger backlash against the Chinese stranglehold. Historically, US mineral diversification has become complex when geopolitical tensions with Beijing escalated. In 2023, Chinese export restrictions on gallium and germanium in response to US semiconductor export controls exposed the dependency of Western critical mineral access on China. In August of this year, a US contractor-bound Australian shipment of antimony was barred from leaving the Chinese Ningbo port due to the Beijing-Washington trade war resulting in a ban on Chinese antimony exports to the US. Gallium is a critical mineral used in semiconductors; likewise is antimony, which Australia holds large untapped reserves of in Queensland, New South Wales, and Western Australia. 

Expanding the US-Australian partnership advances mineral potential for industrial and economic development in Australia. In the deal’s framework, Australia is to reduce long-term dependency on Chinese critical minerals and strengthen its bilateral base with America. With the creation of an alternate supply chain, the US can circumvent Chinese market control of minerals and semiconductors. Reducing Chinese refinement interdependence could be the signal for Western allies and mineral-rich nations to bolster sustainable supply chains and independent mining and refinement capacities. In the new minerals deal, the US will separately invest in a 100-tonne-per-year gallium refinery in Western Australia, with $2.2 billion in financing for critical mineral projects by the Export-Import Bank.

 In response to US-Australian investment, China calls for supply chain stability. Beijing has expanded its rare earth export and curbed automotive supply chain issues, while the US-Australia mineral deal intends to break Chinese dominance in semiconductor dominance. Growing uncertainty in the semiconductor supply chain heightens contentions over EV and smartphone critical technology, urging Beijing to defend its market position. Spokesperson for the Chinese Ministry of Foreign Affairs Guo Jiakun told reporters at NBC that resource-rich nations should “play a proactive role in safeguarding security and stability of the industrial supply chains.” The comment strongly alludes to Chinese interests in preserving its role in the global critical minerals market. This comes after early October, when China expanded its rare earth controls to prevent a claimed “misuse” of critical minerals in defense and sensitive sectors, such as the use of semiconductors in missiles and fighter jets.

From Bathroom Tiles to Ballistic Missiles

Recent realignment on US resource security and technological cooperation repositions allied defense control and dominance in critical mineral refinement and extraction. With the US spearheading the critical minerals endorsement of Australia in reducing Chinese dominance, the momentum closely follows the G7’s 5-point plan on ensuring critical minerals security. As a key Pacific ally, Australia is integral for its compatible political system and rich mineral supply, being among the global leaders in producing cobalt, manganese, zircon, tantalum, and roughly half of global lithium supplies.

With the AUKUS deal, rare earth mineral refinement and US-Australian control will streamline the process of developing coalition weapons platforms, such as AUKUS pillar 1 Virginia-class nuclear submarines, which will replace the aging Australian fleet. The deal is a critical injection and viable investment of US subsidies due to the failing execution of the “Made in Australia” policy, which has inadequately performed in elevating Australian mineral refinement capacities. Increased visibility of the use of Australian critical minerals by China for weapons development led to the exclusion of China from critical minerals projects in the deal. Cooperation with Beijing is currently faulty, as the refinement and export of rare earth minerals such as gallium to US reserves has been disconnected.

The list of “critical” minerals is ever-changing, running some 50 elements. In the Australian Outback exist vast untapped reserves of cobalt, vanadium, and tungsten. Zirconium is traditionally used in bathroom tiles and toilet bowls but is also used in hypersonic missiles due to its withstanding high temperatures. Chinese companies are the largest shareholders in Australian mineral exports of zirconium, providing a vulnerable cornerstone of Chinese interest in the resource. Zirconium processing is potentially being re-exported to Russia for development in Russian military weaponry, as Chinese to Russian exports surged 300% since 2022. In addition, under the Chinese military fusion doctrine, commercial and tech company development is under the jurisdiction of the Chinese military. This draws tensions with Australian officials and export controls, as zirconium is also used in nuclear power capabilities, such as zirconium sponge in fuel rods. China, however, has less than 1% of the world’s zirconium supply, leaving it vulnerable to export controls in Australian-US agreements. Australian Ambassador to the United States Kevin Rudd suggested that the US and Australian definition of “critical minerals” for policy reasons should be narrowed to the potential for weapons integration, acting as defense assets to feed weapons systems and technology.

In the consumer market, the US auto industry indicates the supply chain has difficulties in the Electric Vehicle (EV) transition acceleration process. EV batteries are vital for the Biden-era environmental goals of Ford, GM, and European auto companies, but decades of Chinese-dependent supply chains could have lasting economic impacts that could devastate the EV market. Beijing’s understanding of its position has been used as leverage for more cooperative trade agreements between the US and the West, as they call for cooperation while accelerating mineral processing infrastructure.

For reciprocity of the deal in both the US and Australia, US mineral access and refinement must ensure mutual benefit through security investments to uphold Australian sovereignty. Outside of China, the second largest critical minerals refinery is the Australian company Lynas Rare Earths, which relies on Malaysia for refining capabilities. Australian mineral refinement companies like Lynas require US support to remain in contention with Chinese markets, which suggests a need for US foreign policy backing to ensure a strategic advantage remains. This is contrary to US-owned mining company MP Materials, which is backed by Pentagon security and price guarantees. Widely disregarded before the deal, Western industrial policies backing mineral processing suggest that a streamlined US-Australian supply chain could not survive without immense government backing.

If the erosion of Australian mineral companies grows, allied manufacturing and refinement may diminish in critical regions. Australia, on the terms of the agreement, committed $100 million of equity investment to the Arafura Nolans mineral refinement project in the Northern Territory, boring and supplying 5% of global critical minerals such as phosphate, uranium, and thorium, all used in leading weapons technologies. The strengthening of the Indo-Pacific relationship in mineral control provides a framework for resilient allied supply chains against volatile and changing Chinese markets. Extending to South Korea, Japan, and India alliances, the coalition empowers future rare earth sustainability.

 Australian Critical Minerals has dealt the cards to Canberra. New, valuable, and more negotiable than ever. New partnerships, like the US-Australian minerals deal, extend US national interests in controlling mineral sourcing, mining, and refinement against Chinese markets. To secure Pacific supply chains, US backing must be formidable, as Australia is not to sell to its largest market, China.