U.S. and Australia Forge $8.5 Billion Rare Earths Partnership Amid China Export Restrictions

Strategic Partnership Announced

President Donald Trump and Australian Prime Minister Anthony Albanese have confirmed a major $8.5 billion framework agreement to jointly develop rare earth and critical mineral projects, according to reports. The partnership comes as China continues to tighten export controls on heavy rare earth metals that are essential for defense systems, renewable energy technology, and electronics manufacturing.

Strategic Partnership Announced
China’s Export Restrictions Trigger Crisis
Critical Applications at Risk
Australia’s Emerging Role
Immediate Investments and Projects
Australian Companies Expanding Capacity
AUKUS Submarine Program Accelerated
Long-term Supply Chain Restructuring

Sources indicate the agreement was reached after ten months of delayed negotiations, during which Australian officials expressed growing anxiety about both trade relations and the future of the AUKUS nuclear submarine project. Analysts suggest the timing reflects heightened Western concerns about China’s dominance in the rare earth supply chain.

China’s Export Restrictions Trigger Crisis

The report states that China began restricting exports of seven heavy rare earth metals in April 2024, followed by stricter controls in October that reportedly took U.S. officials by surprise. This escalation prompted President Trump to threaten 100% tariffs on all Chinese exports by November 1.

According to the analysis, the situation creates significant vulnerability for the United States, which imported approximately 70% of its rare earths from China between 2020 and 2023. The International Energy Agency reportedly indicates China currently produces 61% and processes 92% of global rare earth supplies.

Critical Applications at Risk

Rare earth elements are reportedly essential for numerous advanced technologies. Analysts suggest these minerals are crucial for the strongest batteries used in wind turbines, electric vehicle motors, and numerous defense applications including missiles, radar systems, and jet fighters.

The report states that a single F-35 supersonic strike fighter requires 420 kilograms of heavy rare earths in its construction. Medical technologies such as MRI machines and laser surgery equipment also depend on these materials, according to experts.

Australia’s Emerging Role

Australia represents one of the few countries outside China with both mining and processing capabilities for rare earths. The country has reportedly advanced significantly in renewable energy technology, with South Australia operating its grid with 72% renewable energy since 2023.

Prime Minister Albanese had previously pledged A$1.2 billion to build a strategic reserve for critical minerals during his election campaign. Reports indicate his government has now committed substantial funding specifically for rare earth mining and processing projects.

Immediate Investments and Projects

Under the new agreement, Australia and the U.S. will reportedly contribute $1 billion over the next six months to immediately available projects. The partnership includes U.S. investment in Australian rare earth processing facilities and involves Japan in at least one joint venture.

Perhaps most significantly, the Pentagon will invest in constructing a gallium refinery in Western Australia. Australian company Alcoa had previously explored gallium projects with Japan, according to reports.

Australian Companies Expanding Capacity

Arafura Rare Earths received nearly A$1 billion in 2024 to build Australia’s first combined mine and refinery for rare earths, the report states. Meanwhile, Lynas Rare Earths started its first processing plant in Western Australia in November 2024, though analysts suggest Australia may not achieve full independence from Chinese processing until 2026.

Iluka Resources is reportedly finishing a plant to refine tailings rich in heavy rare earths from its sand-mining operations. This facility would become the only source of heavy rare earth metals outside China, according to industry experts.

AUKUS Submarine Program Accelerated

The rare earth agreement comes alongside discussions about accelerating the AUKUS nuclear submarine program. President Trump reportedly indicated he is looking at a faster timeline for supplying up to five Virginia-class attack submarines to Australia by 2032.

This massive defense agreement, estimated to cost Australia $368 billion, aims to counter growing Chinese influence in the region. The partnership on critical minerals is viewed by analysts as complementary to these broader security objectives.

Long-term Supply Chain Restructuring

While optimism about alternative rare earth supplies has increased, the report states that China will likely maintain control over refinery processing for the near term. The U.S.-Australia partnership represents a significant step toward diversifying supply chains that have become dangerously concentrated in one country.

According to analysts, this collaboration marks the beginning of a fundamental restructuring of global critical mineral supply chains that could reduce Western dependence on China over the coming decade.