A supply chain that can be throttled by one nation is a supply chain at risk. That reality underpins the latest strategic agreement between the United States and Australia, aimed squarely at breaking China’s near-monopoly on rare earths and critical minerals.
Australian Prime Minister Anthony Albanese said the deal supported a pipeline of $8.5 billion in “ready-to-go” projects to expand mining and processing capability. Under the agreement, each country will invest $1 billion over the next six months in projects across both countries, the framework said. The move hastens cooperation that started during Trump’s first term but Albanese argued the new pact takes the partnership to the “next level.”
China currently controls about 70% of global rare earths mining and 90% of processing capacity, a dominance that has allowed Beijing to impose export restrictions on key materials. These minerals are indispensable to high-value sectors, ranging from defense systems and semiconductor fabrication to electric vehicle motors and wind turbine generators. According to the U.S. Geological Survey, in 2024, China produced 270,000 tons of rare earths, while the figure stood at 45,000 tons in the U.S. and 13,000 tons in Australia.
The engineering scope of the agreement is quite large, including an advanced 100-tonnes-per-year advanced gallium refinery in Western Australia, crucial for semiconductor and optoelectronic devices. Gallium, often recovered as a by-product during bauxite processing, needs very specialized refining technology to achieve purity levels of better than 99.9999% necessary for high-performance applications. Alcoa has been discussing the feasibility of such a project with Japanese partners, underlining another important cross-border industrial collaboration at the heart of the deal.
Rare earth processing beyond gallium presents some serious technical challenges. Separation of individual elements, such as neodymium, dysprosium, and terbium, requires hundreds of sequential stages in a solvent extraction system, precise pH control, and robust waste management to handle radioactive byproducts. The existing facilities in Australia, which include those from Lynas Rare Earths, count among the few outside China that can perform these at scale. Lynas, holder of a U.S. Defense Department contract for a plant in Texas, has faced permitting and cost uncertainties, highlighting further the complexity of expanding refining capacity in Western jurisdictions.
The pact also includes provisions for addressing systemic bottlenecks: streamlined permitting for mines and processing plants, coordinated pricing strategies, and joint rules for reviewing sales of critical mineral assets. All those will help to cut lead times and block hostile acquisitions. In addition to these steps, the Export-Import Bank of the United States will issue letters of interest totaling $2.2 billion in financing for critical mineral projects, potentially unlocking up to $5 billion in investment.
Rare earths are critical to permanent magnets found in precision-guided munitions, radar systems, and advanced robotics from a strategic materials perspective. Gallium, along with other critical minerals, feeds into compound semiconductors such as gallium arsenide (GaAs) and gallium nitride (GaN), powering high-frequency communications and military-grade electronics. Securing these inputs shields defense and technology sectors against geopolitical shocks.
China’s new export controls go beyond raw materials to include technologies involved in mining and magnet manufacturing, so that foreign firms need licenses to process abroad with technology of Chinese origin. Such regulatory reach underpins Beijing’s leverage, to which its broader manufacturing dominance is added: according to UNIDO projections, it will account for 45% of global value added in manufacturing by 2030.
The U.S.-Australia framework is therefore not just a trade deal but an engineering and industrial mobilization. It links upstream resource development with midstream processing and downstream technology applications in an effort to create a resilient supply chain from mine to finished product. To policymakers and investors, the deal is a signal of serious intent to rewire the global flow of critical minerals, reducing exposure to a single chokepoint and embedding technological sovereignty into the fabric of allied economies.
