Australia’s rare earth handshake with Washington was done at record speed. The $8.5 billion framework signed by Prime Minister Anthony Albanese and President Donald Trump marks a major play in the new minerals race, one shaped by supply fears, trade tensions and a scramble for control over the materials that power modern defence and technology.
Australia holds about 4.2 million tonnes of rare earth reserves and produces around 18,000 tonnes a year, ranking fourth globally. These minerals include neodymium and praseodymium, used in magnets for electric vehicles and wind turbines, and dysprosium oxide, vital for submarines and fighter jets. Each F-35 jet uses close to 420 kilograms of rare earth elements, while a single wind turbine can require up to 600 kilograms of magnetic alloys.
Lynas Rare Earths, operating in Western Australia and Malaysia, and Arafura Resources in the Northern Territory are at the heart of the expansion. Arafura’s Nolans project alone is projected to supply about five per cent of global demand once fully operational. The deal’s first phase will see both countries invest roughly $2 billion each in mining, processing and recycling facilities.
The timing was not accidental. Beijing’s export restrictions on gallium, germanium and rare earth materials over the past few months jolted markets and forced Washington’s hand. China still controls around 70 per cent of global rare earth mining and nearly all processing. When those export limits tightened, prices for several critical materials jumped by more than 30 per cent, pushing the US to accelerate talks with Canberra. President Trump called the deal’s completion “unprecedented in speed”, a reflection of the urgency to reduce America’s reliance on China’s supply chains.
The agreement also aligns with AUKUS commitments. Each conventionally armed, nuclear-powered submarine Australia plans to build will require rare earth magnets for propulsion and navigation systems. With the US reaffirming support for AUKUS, and the minerals pact now in motion, both governments are effectively tying resource security to regional defence strategy.
For Australia, the opportunity is enormous. It means new processing capacity, jobs across mining towns, and stronger ties with the US supply chain. But the challenges are already visible. Rare earth extraction and refining bring environmental and social pressures, especially around sites in the Pilbara and Central Australia where Indigenous consultations are under scrutiny. The government has promised “long-term outcomes for workers, the community and taxpayers”, but project delays or cultural heritage disputes could slow progress.
Japan’s involvement adds another layer. Alcoa’s gallium refinery in Western Australia is part of a trilateral effort between Tokyo, Canberra and Washington to reduce dependency on Chinese processing. The US Export-Import Bank is backing several Australian projects, including RZ Resources, underlining how this alliance extends beyond a single bilateral deal.
The markets have responded quickly. Shares in Lynas and Arafura rose more than 30 per cent after the announcement, and early trading today in Sydney shows another five to ten per cent lift. Investors see both opportunity and risk, aware that the next moves may depend on diplomacy rather than geology.
Trump and Xi Jinping are due to meet on 31 October at the APEC summit in Seoul. Officially, the talks are about tariffs, fentanyl and AI competition, but rare earths may surface informally. If negotiations go poorly, the minerals pact could face new hurdles; if they go well, Beijing may push for trade concessions that complicate US-Australian cooperation. Either way, the meeting will shape how this deal evolves.
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