Donald Trump and Anthony Albanese officially signed a Action on Climate Partnership Agreement. To date, their goal has been “critical mineral and energy dominance” in United States/Australia relations. If fully realized, this deal could be worth up to $US8.5 billion. It would be the biggest step yet to lessen our reliance on China, the world’s leading supplier of critical minerals.
The partnership is set to roll out its first pipeline of collaborative projects, as enshrined in the US-AU Critical Minerals Framework. This initiative will direct billions into mining projects across both nations, leveraging Australia’s abundant resources to meet the growing global demand for critical minerals essential for technology, including computer chips.
Details of the Partnership
The pact authorizes Australia and the US to jointly obtain ownership interest in mineral processing facilities. It provides a “right of offtake” to them. This provision ensures that these facilities will set aside a share of supply for each country. In exchange, they will obtain capital investment from every country.
The Australian and US governments are partnering to invest $US3 billion, or roughly $4.6 billion, into critical mineral projects. We believe that all of these investments will make for a great six months ahead. These 13 projects will impact almost all states and territories across Australia. They will draw on the country’s abundant deposits of critical minerals—including graphite, which is mined in the world’s third-largest deposit in Queensland.
This strengthening of our bilateral partnership is timely as it comes amid China’s growing monopoly over critical minerals supply. In reality, it has a grip on nearly 90 percent of the world’s refining market. This dominance has put massive strain on foreign facilities. Consequently, Western governments have been focused on finding new, reliable sources for these critical metals and minerals.
Strategic Significance
As worldwide demand for the materials used in computer chips surges, the US-Australia framework is especially significant. These levels change daily but experts estimate this demand climbs to about 700 to 750 tonnes. The partnership is intended to address both increasing access to resources as well as strengthening economic ties between the two countries.
The first facility approved evenly under this framework was a large gallium refinery in Western Australia, being developed by Alcoa-Sojitz. This facility will focus on producing around 100 tonnes of gallium annually. Further, it shows what’s possible when we harness international demand to accelerate domestic large-scale production.
As Australian Minister for Resources Sussan Ley notes, “It takes years and years to get approval,” highlighting the complexities involved in developing new mining projects. Moving beyond extraction the partnership makes progress on these challenges by encouraging investment into processing capabilities, rather than extraction alone.
Future Prospects
Donald Trump expressed optimism about the future of this partnership during the signing ceremony, stating, “About a year from now you’ll have so much critical minerals and rare earths you won’t know what to do with them. They’ll be worth about $2.” His remarks highlight, beyond the expected windfall of funding, the huge economic opportunity for both countries.
Australian Prime Minister Anthony Albanese was keen to highlight that this time the initiative is not just about digging up resources. First it rightly emphasizes making investments along entire supply chains—supply chains which thanks to U.S. “It’s not just digging things up and exporting them, but making sure how do we have [investment] across the supply chains with our friends being able to benefit,” he remarked.
