WASHINGTON — U.S. President Donald Trump and Australian Prime Minister Anthony Albanese signed a landmark critical minerals and rare earths agreement on Monday. The deal aims to reduce U.S. dependence on China for essential materials used in everything from electric vehicles to fighter jets.
“In about a year from now we’ll have so much critical mineral and rare earth that you won’t know what to do with them,” Trump said.
Albanese added that the deal would take the U.S.-Australia relationship to the next level.
Why the Deal Matters
Australia holds large deposits of rare earths and other critical minerals but, like the U.S., relies on China to process them. The agreement expands processing capacity outside China, requiring significant investment from both governments and private firms.
The U.S. has already invested in MP Materials, Trilogy Metals, and Lithium Americas. Now, it plans to invest in Australian companies as part of a joint $1 billion investment over six months.
Kevin Hassett, White House economic director, called Australia “really helpful in making the global economy less exposed to rare earth extortion by China.”
Countering China’s Dominance
The agreement comes as China imposes stricter export rules on rare-earth magnets, giving it outsized control over the global tech supply chain. Trump and top U.S. officials emphasized that the deal is part of a broader strategy to counter China’s dominance.
“China is a command-and-control economy, and we and our allies will neither be commanded nor controlled,” Treasury Secretary Scott Bessent said.
Analysts warn that long-term investments in mining and processing outside China, including in Central Asia, are essential because China has a 40-year head start in rare earth production.
Investment and Strategic Goals
The U.S. and Australia will invest over $3 billion in joint projects within six months, an unusually fast pace for such initiatives. The deal could supply immediate U.S. demand, but developing enough capacity to rival China will take decades.
Pini Althaus, mining executive, stressed the need for price floors in contracts to prevent China from manipulating the market.
The agreement also complements Trump’s AUKUS defense pact with Australia and the UK, reinforcing the U.S. strategy to strengthen alliances while securing critical supply chains.
