U.S. scramble to replace Chinese minerals turns to Australia
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China's weaponization of all-important rare earth minerals is sending the Trump administration scrambling to find new sources for the materials that power the modern world.
Why it matters: From Australia to Ukraine, and at all points in between, the U.S. position on rare earth minerals in the Trump administration is clear — get them out of the ground, at any cost, and the sooner the better.
The big picture: Virtually every important technology in society has components that won't function without rare earth minerals. They are elemental — literally and figuratively — to the global economy.
- They are also, as it happens, almost totally under the control of China as it stands today.
- The more China exerts that control, the more aggressive the administration gets, whether financially or diplomatically, to find alternatives.
Catch up quick: The trade truce the world's two largest economies struck in early summer guaranteed the flow of crucial rare earth magnets out of China.
- That only lasted a few weeks, until the Chinese started cutting off supplies again and announced a new regulatory regime that would restrict global access. That prompted the U.S. to threaten fresh 100% tariffs on China, but also to accelerate the ongoing hunt for alternatives.
- The materials at issue are critical for computing and telecom equipment, F-35 fighter jets, drones, submarines and smart bombs.
- Under President Xi Jinping's "Made in China 2025" initiative, launched a decade ago, China has come to dominate the mining and processing of these minerals and other precious materials, such as lithium used in batteries.
Zoom in: Australia is now offering itself to the U.S. as an alternate supplier.
- President Trump met top Australian officials in Washington Monday to discuss what might be possible.
- The sides reportedly signed a deal giving the U.S. access to an $8.5 billion pipeline of Australian minerals, with both countries pledging an initial $1 billion investment in minerals processing.
Yes, but: Australian rare earths reserves are about one-eighth of what China has, per USGS data — and actual mine production is less than a tenth of what the Chinese put out.
- The deal struck Monday should improve that, but not in sufficient quantities to close the gap (yet).
Zoom out: The U.S. is simultaneously taking steps to diversify its supply by expanding domestic production.
- By investing in MP Materials and helping to support Ramaco Resources, the government has made clear that extraction of domestic reserves will be a significant priority in the years to come.
- Domestic reserves, though, are a tiny fraction of even Australia's.
What to watch: The U.S. has plenty of irons in the fire, as it were, to get minerals elsewhere.
- A deal with Ukraine earlier this year gives the U.S. preferential access to the country's reserves.
- Trump has also made clear his ambitions for control over Greenland, which has significant mineral reserves as well.
The bottom line: If you don't know what scandium and yttrium are, start brushing up, because they and other minerals may determine the course of both the global economy and geopolitics in the years to come.
Marc Caputo contributed.
