Not every day does a geopolitical showdown culminate in the hope of “so much critical mineral and rare earths that you won’t know what to do with them,” as said by President Donald Trump. That is precisely the vision behind the recently signed U.S.-Australia critical minerals deal, a deal characterized by Australian Prime Minister Anthony Albanese as a pipeline of projects worth up to $8.5 billion. The initiative is specifically aimed at unwinding China’s monopoly on rare earths and gallium two categories of materials that enable advanced technology, clean energy systems, and high-end defense platforms.
The agreement identifies three groups of joint projects, with companies such as Alcoa being part of them. In the next six months, the two governments plan to invest $1 billion to $3 billion in strategic mineral initiatives, depending on one’s reading of which official report. The U.S. Export-Import Bank will issue seven letters of interest valued at $2.2 billion in financing, releasing as much as $5 billion in investment capital. One flagship initiative is an upgrade of rare earths processing in Australia, a country already one of the few outside China with refining capabilities. Another is constructing a gallium refinery in Western Australia capable of producing 100 metric tons per year.
Refining rare earths is a complex, technically demanding process of crushing, grinding, chemical separation, and solvent extraction to create separate elements such as neodymium, dysprosium, and terbium. They are applied in the production of high-performance permanent magnets utilized in electric vehicle drive motors, wind turbine generators, and radar. In defense applications, a single F-35 fighter jet requires more than 400 kilograms of rare earths for the stealth coatings, actuators, and sensors. China currently maintains about 90% of global rare earths refining, of rare earths, a position built up over decades of research investment, people, and infrastructure. To replicate such capability somewhere else takes not only capital but also technical know-how and environmental permit frameworks.
Gallium, less well known, is similarly strategic. It’s a soft, silvery metal that is used in semiconductors, light-emitting diodes, high-frequency electronics, and defense radar. Its application in gallium nitride (GaN) technology is now central to next-generation power electronics and satellite communications. The proposed Western Australia refinery, backed by Alcoa in partnership with Japan Australia Gallium Associates a Sojitz and JOGMEC joint venture is seeking to tap gallium recovered as a byproduct from alumina refining. As Alcoa Australia president Elsabe Muller noted, “This opportunity could deliver additional value from our established operations and further demonstrate how Alcoa’s long-standing mineral processing capabilities can be significant in supporting state, national and global objectives in technology and national defence.” The partners expect a decision by the end of 2025, with production starting in 2026.
The urgency is added to by Beijing’s recent export controls. China today, in “announcement No. 62 of 2025,” requires government approval of any foreign export with even trace amounts of rare earths, and reporting of desired application. These requirements apply to products containing over 0.1% Chinese rare earth or products processed by Chinese technology, placing traceability and license hurdles on global producers. Treasury Secretary Scott Bessent framed the stakes bluntly: “This is China versus the world. They have pointed a bazooka at the supply chains and the industrial base of the entire free world, and we’re not going to have it.”
Market reaction has been swift. The Dow Jones Industrial Average fell nearly 900 points after the announcement, with electric vehicle and semiconductor stocks leading declines. For gallium and rare earth industries, the engineering task is not merely acquiring ore but creating the midstream and downstream processing chains within outside of the Chinese system. Australia has large deposits, but its processing facility is still relatively underdeveloped, and hence it costs more than China. Scaling up entails blending cutting-edge separation technologies, waste management schemes, and supply arrangements with downstream producers.
Past precedents indicate the potential for such diversification. Japan’s 2010 Sojitz-Lynas partnership acquired China’s rare earth supply in its absence after a diplomatic dispute that led to a Chinese export ban. Lynas now provides approximately 12% of global rare earth oxides and 90% of Japan’s light rare earths. India and America are also creating analogous models as MP Materials established a local magnet plant in Texas to complement California mining operations.
The U.S.-Australia agreement is therefore more than a free trade agreement; it is an industrial and engineering policy model. It addresses not only the mining of raw materials but also the complex chemistry, precision machinery, and protection for the environment required to extract mined ore into high-purity oxides and metals usable in new technologies. By putting gallium and rare earth processing capacity in allied nations, the agreement aims to create redundancies within global supply chains reducing exposure to geopolitical disruptions and ensuring key technologies are accessible even under export restrictions.
