Trump signs rare earths deal with Australian Prime Minister as a way to confront China

WASHINGTON (AP) — President Donald Trump and Australian Prime Minister Anthony Albanese signed a critical minerals deal at the White House on Monday as the United States eyes the continent’s rich rare earth resources when China imposes tougher rules on exporting its vital minerals abroad.

The two leaders described the agreement as an $8.5 billion deal between the two allies. Trump said it was negotiated over several months.

Trump, a Republican, boasted of the agreement: “In about a year from now, we will have so many critical minerals and rare earths that you won’t know what to do with them.” “It will be worth $2.”

Albanese added that the agreement takes the relationship between the US and Australia “to the next level”.

Earlier this month, Beijing announced that it would require foreign companies to obtain approval from the Chinese government to export magnets containing trace amounts of rare earth materials that originated from China or were produced using Chinese technology. The Trump administration says this gives China broad power over the global economy by controlling the technology supply chain.

“Australia is going to be really helpful in efforts to take the global economy and make it less risky, less vulnerable to the kind of rare earth extortion that we’re seeing from the Chinese,” Kevin Hassett, director of the White House National Economic Council, told reporters Monday morning before Trump’s meeting with Albanese.

Hassett noted that Australia has one of the best mining economies in the world, while praising its refineries and abundance of rare earth resources. Among the Australian officials accompanying Al-Albani are ministers who oversee resources, industry and science, and Australia possesses dozens of important minerals that the United States seeks to obtain because they are needed in everything from fighter planes and electric vehicles to laptops and phones.

Boost for more mines

The agreement could have an immediate impact on US rare earth supplies if US companies can secure some of what Australian mines already produce, although it would take years – if not decades – to develop enough rare earth supplies outside China to limit its dominance.

Benny Althouse, who founded USA Rare Earth in 2019 and is now developing new mines in Kazakhstan and Uzbekistan as CEO of Cove Capital, said it would be crucial for contracts to purchase materials from Australian mines to include price caps, similar to what the US government promised MP Materials this summer, to protect against China’s price gouging.

For decades, China has used the tactic of dumping excess critical minerals on the market to drive down prices to force mining companies in the rest of the world out of business to eliminate any competition.

“Getting China out of stock to be able to manipulate prices is a critical first step for Australia and the West to be able to develop critical minerals projects to meet our demands,” said Althouse, who has spent nearly a quarter of a century in the mining business.

The agreement highlights how the United States is using its global allies to confront China, especially as it uses its traditional dominance in rare earth materials as a weapon. Senior Trump officials have used Beijing’s tactics as a rallying cry for the United States and its allies to work together to try to reduce China’s influence.

“China is a command-and-control economy, and we and our allies will not be command-and-control,” Treasury Secretary Scott Besent said last week. “They are a state economy and we will not allow a bunch of bureaucrats in Beijing to try to manage global supply chains.”

The level of investment indicated in the agreement shows how serious the two countries are in addressing the problem.

“The United States and Australia will invest more than $3 billion in joint critical minerals projects within six months,” said Gracelyn Bhaskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies in Washington. “This is a fairly unprecedented speed of capital injection.”

But Althouse warned that Australia cannot provide everything the United States needs, so it is crucial that America continues to invest in long-term efforts to develop mining and other processing projects at home and in friendly countries. He said Central Asia may be one of the most promising places for investment because the region has large reserves of rare earths, and the Soviet Union had already done some initial development work when it took control of that region. This could shave years off the time it would take to build a new mine there.

“Keep in mind that China has almost a 40-year head start on us,” Althaus said. “We have at least two decades to catch up with China in terms of being able to meet our supply chain operations.”

Albanese’s visit comes before Trump plans to meet Chinese President Xi Jinping in South Korea later this month.

Security partnership

Another topic of discussion was AUKUS, a security agreement with Australia, the United States and the United Kingdom that was signed during the Democratic administration of US President Joe Biden.

Trump noted on Monday that the American University in Australia had been established “a while ago” but that the agreement was now “moving very quickly and very well.” “Our defense and security partnership with AUKUS is very important to us,” Albanese said.

John Phelan, Secretary of the Navy, said the United States wants to take the original AUKUS framework and improve it for the three signatory nations while clarifying “some of the ambiguity” in it.

“So it has to be a win-win for everyone,” Phelan said.

The center-left Albani was re-elected in May, and suggested shortly after his victory that his party could increase its majority by not modeling itself on Trumpism.

“Australians have chosen to meet global challenges the Australian way, looking after each other while building for the future,” Albanese told supporters during his victory speech.

Associated Press writers Josh Funk and Didi Tang contributed to this report.