U.S. and Australia Sign $8.5 Billion Critical Minerals Pact to Counter China's Dominance

On October 20, 2025, U.S. President Donald Trump and Australian Prime Minister Anthony Albanese signed an $8.5 billion critical minerals agreement at the White House, aiming to strengthen supply chains for rare earth elements and reduce dependence on China's dominant market position.

The agreement commits both nations to invest at least $1 billion each over the next six months to bolster mining and processing of rare earth elements essential for renewable energy, semiconductors, and defense technologies. Additionally, the U.S. Export-Import Bank has issued letters of interest totaling over $2.2 billion to support Australian projects by companies such as Arafura Rare Earths and Alcoa. The pact also includes plans for developing a gallium refinery in Western Australia, a critical component for advanced technologies.

China currently controls approximately 90% of the global rare earth refining capacity and a significant portion of mining and magnet production. In April 2025, Beijing imposed new regulations requiring foreign companies to seek approval for exporting products containing traces of Chinese-origin rare earths. This move heightened concerns about supply chain vulnerabilities and the need for diversification.

Australia possesses rich reserves of critical minerals and has an efficient mining industry, making it a strategic partner for the U.S. in reducing reliance on Chinese supplies.

By investing in alternative sources of rare earth elements, the U.S. and Australia aim to secure stable prices and supply, mitigating risks associated with China's market dominance. The development of mining and processing projects is expected to create jobs and stimulate economic growth in both countries. Access to critical minerals is essential for the production of advanced technologies, including renewable energy systems and defense equipment.

This agreement is part of broader efforts to enhance the AUKUS security alliance and counter China's recent export restrictions on rare earth materials. The pact underscores the strategic importance of the U.S.-Australia relationship in maintaining a free and open Indo-Pacific region.

While the agreement signals stronger U.S.-Australia cooperation in countering Chinese influence, it is non-binding and may take years to yield tangible outcomes due to ecological and infrastructure challenges. Additionally, many ventures are still in early stages, with regulatory and talent challenges ahead.

This comprehensive agreement marks a significant step in the U.S. and Australia's efforts to secure critical mineral supplies, reduce dependence on China, and strengthen their strategic partnership.