U.S. and Australia Seal $2 B Pact to Counter China’s Rare Earth Dominance

The United States and Australia have signed a bilateral framework committing at least US $2 billion toward the development of new mining and processing projects for critical minerals and rare earths.

The agreement, formalized in Washington, aims to accelerate investments that enhance supply-chain resilience for materials essential to advanced manufacturing, defense systems, and clean energy technologies.

According to reports from Reuters and AP News, both governments plan to channel roughly US $1 billion each into projects over the next six months, as part of a broader pipeline valued at up to US $8.5 billion. The initiative is designed to reduce reliance on single-country refining and processing capacity and ensure stable access to strategically important elements.

One of the first projects supported under this framework is a gallium recovery facility led by Alcoa Corporation in Western Australia. The proposed plant, integrated with Alcoa’s existing alumina refinery operations, is projected to produce enough gallium to meet around 10 percent of global demand once operational.

Australian authorities have reportedly allocated up to US $200 million in concessional equity financing to the project, while the U.S. government will participate through complementary funding and offtake agreements.

Gallium is a critical input in compound semiconductors, optoelectronics, and defense applications. Global supply is currently limited, with the majority of production concentrated in Asia. The Alcoa-led project is expected to diversify this landscape by establishing a stable production source within the allied bloc.

Officials emphasized that the agreement reflects a coordinated effort to strengthen domestic and allied industrial capabilities, while also creating opportunities for private-sector investment in refining and separation technologies.