Many details remain buried in Australia’s rare earths deal with America

When Anthony Albanese declared Australia was “ready to go” with a sweeping new critical minerals agreement with the United States that would unlock a resources pipeline with as much as US$53 billion, according to the Trump administration — and US$5 billion in investment commitments — it sounded decisive. 

It’s a heady headline figure for what was fuzzily couched as a “framework”, and details of the announcement came largely fact-free. For a deal that had been in negotiations for “four, five months”, it was thin on detail.

There are no memorandums of understanding, no published timelines for major new projects, and very few clear commitments on who invests how much, in what and by when — beyond a deal to invest in the Alcoa-Sojitz gallium project in Western Australia and the already well-backed Arafura Rare Earths’ Nolans project in the Northern Territory.

There was a promise about five further projects, but no specifics. “The Export-Import Bank of the United States is issuing seven Letters of Interest for more than US$2.2 billion in financing, unlocking up to US$5 billion of total investment, to advance critical minerals and supply-chain security projects between our two countries,” the White House said.

“In about a year from now, we’ll have so many critical minerals and rare earths that you won’t know what to do with them. They’ll be worth about two dollars,” added US President Donald Trump, who throws words around with cavalier abandon.

Trump’s confidence is patently preemptive. Apart from the existing Lynas Rare Earths mine in Mt Weld, the only other mine that appears ready for production is Arafura Nolans. Others are years away — mines take three to four years to build and get into production, and most rare earths projects in Australia are still in the development phase, meaning that a timeline of towards the end of a decade (at very best) is more credible. 

Also concerning is the deal’s commitment to “accelerate, streamline, or deregulate permitting timelines and processes” to mine and process rare earths that critics already fear may trample community and environmental concerns. And that is not taking into account developing and instituting state-of-the-art processes that will allow the extraction and processing of minerals whose extraction can be notoriously toxic and water-hungry.

In truth it’s just the latest, albeit most coordinated, bid — given the broad international race led by the US but also including the EU, Russia, India and more — to catch up with China in rare earths. 

The race for rare earths is global

Australia is not the only game in town when it comes to stepping up production and processing of rare earths. China provides about 38% of the world’s raw rare earth minerals. Vietnam has the next biggest rare earth reserves with about 19%, then Brazil with 18.1%, Russia 10.4%, India 6% and Australia with 3.5%. The United States and Greenland have 1.3% each.

And the US is not the only major power chasing these minerals. The European Critical Raw Materials Act (CRMA), which entered into force in May 2024, set binding and aspirational targets for the EU’s supply-chain resilience in critical and strategic raw materials.

In parallel, the EU deepened its partnership with Australia via a memorandum of understanding inked in May 2024, under which the EU and Australia will collaborate across the full critical-minerals value-chain (exploration, extraction, processing, refining, recycling) to diversify EU supply, strengthen Australia’s sector, and promote a sustainable, ethical value-chain. In July 2025, the EU identified 13 projects that required €6.5 billion in investment. Three of these were led by Australian companies, but in Madagascar, Kazakhstan and Serbia.

As noted, China already dominates global rare earths with an estimated 70% of production and up to 90% of processing capacity. China’s latest five-year plan, which is being discussed by the top leadership of the Chinese Communist Party this week, lays heavy emphasis on high-tech, advanced materials and rare earth value-chains. Having gained a clear advantage already, Beijing can easily throttle supply or export products cheaply to undercut new entrants.

This brings the problem of how to deal with the pricing instability that China will bring to the market. The government has already sent signals about pricing floors and strategic reserves as part of its as-yet-to-be-finalised $1.2 billion critical minerals strategy, which would mean mining companies have a guaranteed minimum price to underpin production costs. The problem is that taxpayers end up footing the bill. Tariffs, of course, are another way to deal with potentially predatory pricing. But does Australia really want to go there?

Picking winners means more lobbying

The deal shines a troubling spotlight on the Canberra dilemma of winner-picking industrial policy versus market discipline. It has not been a happy hunting ground.

The previous government’s backing for the $30 billion Sun Cable project collapsed into administration. The Regional Hydrogen Hubs Program signals strong ambition and is backed by $500 million in government funding, yet there are questions about whether the hubs will deliver at scale, in time, with commercial viability. The $7 billion Northern Australia Infrastructure Facility has been criticised for delays and weak returns and is being remodelled. 

Now, under the $22 billion “Future Made in Australia” agenda — including $1.4 billion for AI and quantum — the risk of politically driven investment decisions looms large. And will come with a fresh wave of lobbying in Canberra.

The government has publicly disclosed company-level commitments to the rare earths sector that already total about $3.3 billion. Iluka Resources has secured up to $1.65 billion in non-recourse loans for its Eneabba rare earth refinery in WA (including a potential $75 million cost-overrun facility). Arafura Rare Earths has previously obtained US$550 million for its Nolans project in the NT. Hastings Technology Metals has a $220 million NAIF loan for its Yangibana mine in WA. Lynas Rare Earths received a modest $15–20 million grant under the Modern Manufacturing Initiative for its Kalgoorlie processing facility.

Together these make up the backbone (so far) of Australia’s goal of a fully integrated domestic rare earth supply chain. But major gaps remain, especially for heavy rare earths like dysprosium and terbium, which Australia currently cannot supply at scale.

That’s where overseas plays matter. Australian-listed companies such as Meteoric Resources and Viridis Mining are developing ionic-clay deposits in Brazil that could fill heavy-REE supply shortfalls. Yet to date, no federal funding has been publicly committed to those offshore projects. Will Canberra extend its investment nets abroad, or will it stay purely onshore and risk relying on external supply anyway?

There is also the question of what the Australian taxpayer will get from all this. Canberra dropped the ball on an increased minerals tax during the Rudd/Gillard years. Indeed, it was a key reason for Rudd’s knifing, and Gillard introduced a watered-down version. Since then, the disastrous gas policy has seen the absurd situation where Australians pay more for our own gas than consumers in countries we export to.

Perhaps it’s time to consider a Rare Earths Sovereign Wealth Fund?