The United States and Australia have officially shaken hands to boost the supply chain for rare earths and other essential minerals. This strategic agreement aims to lessen their dependence on China's market control. Australian Prime Minister Anthony Albanese pointed out that this partnership will support a series of "ready-to-go" projects valued at USD 8.5 billion.
With the rising demand for rare earths and critical minerals, China has begun to limit access to these supplies in response to new US tariffs and ongoing tensions. China currently holds a staggering 70 per cent of the world's rare earth mining and an impressive 90 per cent of the processing of these essential materials. These rare earths are crucial for a wide range of products, from defence equipment to computer chips and cars. As a result, the US companies find themselves heavily dependent on these materials, which puts them in a precarious position this year.
US-Australia trade relations
The US-Australia Free Trade Agreement sets up a solid framework for ongoing discussions and oversight through a Joint Committee and several industry-specific sub-committees. In 2024, the total trade in goods and services between the two countries hit an impressive USD 89.6 billion. The US goods exports to Australia were around USD 34.6 billion, while imports from Australia stood at USD 16.7 billion, giving the US a trade surplus of USD 17.9 billion. When it comes to services, the exchange totalled USD 38.4 billion, with the US exports at USD 26.6 billion and imports at USD 11.8 billion, leading to the US surplus of USD 14.8 billion.
Australia’s current rare earth
As of February 2025, Australia is currently the fourth-largest holder of rare earth reserves in the world, with an impressive estimate of 5.7 million tonnes. The country is also one of the top four producers of rare earth elements, churning out about 13,000 tonnes. Even though commercial rare earth mining in Australia only kicked off in 2007, experts predict that production will continue to grow as Australia solidifies its position in the global supply chain for essential minerals.
How is the US backing Australia’s rare earth?
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