The Australian Prime Minister and US President Trump have signed a historic $8.5 billion critical minerals and rare earths framework on October 20, 2025, aimed at reducing dependence on China’s dominant position in global supply chains. and loosening its tightening of global supply.
China has reacted saying, CNBC reports, “A spokesperson for China’s Ministry of Foreign Affairs was asked about the U.S. and Australia critical minerals deal which has been framed as an effort to counter Beijing’s dominance.
“Resource-rich nations with critical minerals should play a proactive role in safeguarding the security and stability of the industrial and supply chains, and ensure normal economic and trade cooperation,” he added.
The minerals industry has cheered the deal, while Patrick Commins writes in The Guardian, the deal will not be commercially viable.
But then quotes Richard Holden, an economics professor at UNSW: “It’s worth it,” Holden says. “We are in a different world now to the pre-Trump and Xi world. We are in a world where countries are acting like countries, rather than commercial enterprises that happen to operate in those countries.”
In other words: “power matters and bargaining chips matter.”
In a media release posted on the Australian PM’s site, the PM says, ” There are no closer friends and allies than the United States of America and Australia.
“President Trump and I agreed today we will work very hard together in both our nations’ interests.
“We’ve agreed today Australia and America are going to make more things together with our historic framework on critical minerals.
“Australia is home to much of the periodic table of critical minerals and rare earth metals that are vital for defence and other advanced technologies.
“Cooperation on critical minerals and rare earth supply chains is testament to the trusted partnership between Australia and the United States as strategic defence allies.
“I look forward to continuing to work with President Trump to strengthen our partnership and support American and Australian workers, businesses and investors.”
Key Details of the US-Australia Pact
The United States-Australia Framework for Securing of Supply in the Mining and Processing of Critical Minerals and Rare Earths will create a secured bilateral supply chain for defense and advanced technologies. Both countries committed to providing at least $1 billion each in investments over the next six months toward the $8.5 billion project pipeline. (BBC)
Two priority projects were announced with immediate funding commitments :
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Alcoa-Sojitz Gallium Recovery Project in Western Australia: Up to $200 million in Australian equity finance, which will provide 10% of global gallium supply essential for defense and semiconductor manufacturing
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Arafura Nolans Project in Northern Territory: $100 million Australian equity investment, expected to produce 5% of global rare earths once operational
The framework establishes a US-Australia Critical Minerals Supply Security Response Group led by the US Secretary of Energy and Australian Minister for Resources to identify supply vulnerabilities and accelerate mineral processing. (PM site)
What Are Rare Earth Elements
Rare earth elements (REEs) are a group of 17 metallic elements comprising the 15 lanthanides plus scandium and yttrium. Despite their name, they are relatively abundant in Earth’s crust but are called “rare” because they don’t easily form concentrated deposits viable for mining and are difficult to isolate and purify.
REEs are categorized as light rare earths (including lanthanum, cerium, praseodymium, and neodymium) and heavy rare earths (including thulium, ytterbium, and lutetium). These elements possess strong optical and magnetic properties crucial for modern technology, particularly in permanent magnets for wind turbines, electric vehicles, electronics, military equipment, and renewable energy systems. (CSIRO)
China’s Dominant Role
China maintains an overwhelming stranglehold on the global rare earths supply chain, controlling 69% of worldwide mining, 92% of refining capacity, and 98% of permanent magnet production according to Goldman Sachs analysis. This dominance creates significant vulnerability in global supply chains despite the rare earths market being valued at only $6 billion annually, Reuters reports.
“The US-Australia deal represents a strategic effort to build alternative supply chains, though analysts suggest developing a secure, independent supply chain may take 10-20 years to fully materialize. China’s Foreign Ministry responded by stating that resource-rich countries should play a proactive role in bolstering their rare earth supply chains,” says the South China Morning Post.
Sources: Many including AI, BBC, Reuters, Wikipedia, PM’s site etc.
