Aussies to augment critical minerals supply to U.S. after Washington curbs dependence on China

Australia has a fresh opportunity to supply the United States with critical minerals after recent changes to U.S. regulation expected at cutting its dependency on China.

U.S. President Donald Trump in July signed five memorandums sanctioning U.S. Department of Defense funding to be directed to resources or technology “essential to the national defense” in a move aimed at shoring up national supplies. This opens the door for the United States to offer project funding for rare earths, a group of 17 elements used in products ranging from lasers and military equipment to magnets found in consumer electronics.

China supplied 80 percent of the rare earths imported by the United States from 2014 to 2017. The Commission said “The U.S. government has taken the decision to reduce dependence on China-based supply chains. In the case of purchasing by the U.S. Department of Defense, this policy is now mandatory. This has opened a new opportunity for Australian companies to source the growing U.S. specialist manufacturing industry with the required raw or semi-processed materials.”

President Trump and Australian Prime Minister Scott Morrison were due to meet earlier in September to discuss particulars of an agreement on rare earth supply. U.S. reliance on foreign minerals has worried U.S. officials since 2010, when China embargoed exports of so-called rare earth minerals to Japan during a diplomatic row. The issue took on a new urgency earlier this year after Chinese officials suggested rare earths and other critical minerals could be used as leverage in the trade war between the world’s largest economic powers. Australia said establishing an association between the government, defense firms and critical minerals companies to finance new projects via debt and direct investment, as well as arranging supply agreements could help revitalize the U.S. industry.

This could also be used to develop new downstream processing capabilities in Australia as well as the U.S. Australia’s Lynas, the world’s biggest rare earths producer outside of China, has a preliminary agreement with Blue Line of the United States to build a heavy rare earths processing plant in Texas.