By AFP and Focus | 2025-10-22

SYDNEY -- China's total domination of rare earth production could soon be challenged, a leading miner said after the United States struck a breakthrough mineral deal with Australia.

On October 20 in Washington, US President Donald Trump signed a deal with Prime Minister Anthony Albanese giving the United States access to Australia's vast reserves of rare earths and critical minerals essential for everything from solar panels to precision missiles.

The CEO of Australian rare earth miner Arafura Resources said developing projects outside of China could be only a good thing.

"China has basically controlled the rare earths market by controlling the price," Arafura boss Darryl Cuzzubbo told AFP. "Developing supply chains in like-minded countries will help change that dynamic."

Long hunt for a reliable partner

Manufacturing nations such as the United States, Germany and South Korea have long been on the hunt for partners less likely to use rare earths as a bargaining chip.

The US-Australia deal paves the way for alternative supply chains outside of China, Cuzzubbo said. "And that then gives investors confidence that these like-minded countries will do something to change China's control."

In essence, the United States has agreed to help finance a batch of rare earth projects in Australia, gaining preferential access to the minerals they unearth in return. Australia is highly capable in mineral extraction but has struggled to process them onshore. More than 90% of Australia’s lithium is still shipped each year to foreign refineries.

Arafura Resources owns one of the first projects to receive financing under the US–Australian deal and is aiming to swiftly scale up its own refining capacity.

Another Australian company, Lynas Resources, already has a $258 million contract to build a rare earth refinery in Texas.

"There's going to be a dance going on with China until there is this diversified supply chain," said Cuzzubbo. "And China is going to milk it for whatever they can, because they know in three to five years' time, they're starting to lose the control."

Analysts consider it unlikely that Australia will ever produce refined rare earths on the same scale as China, but it could loosen Beijing's stranglehold if it builds up even a small fraction of comparable capacity.

"Australia is the United States' most important partner in countering China's dominance in rare earths," the Center for Strategic and International Studies (CSIS) said in an October 20 article.

Australia's strengths

Australia's importance lies in its unmatched resource base and financial strength, CSIS added. It possesses some of the world's richest deposits of critical minerals, and its stock exchange is a global powerhouse for funding mining ventures, second only to Asia in total market value of such ventures.

Albanese said the rare earth deal would lead to $8.5 billion in critical mineral projects in Australia and take relations to the "next level."

The Australian premier has touted his country's abundant critical minerals as a way to loosen China's grip over global supplies of rare earths, which are vital for tech products.

Government figures show Australia is among the world's top five producers of lithium, cobalt and manganese, which are used in everything from semiconductors to defense hardware, electric cars and wind turbines.

Analysts have said Australia is unlikely to challenge China's dominance, but it does offer a reliable, smaller pipeline that lessens the risk of overdependence on China. The Australian government said it and the US government would each invest more than $1 billion over the next six months, while the White House put the figure at $3 billion between the two countries.