On Monday, U.S. President Donald Trump and visiting Australian Prime Minister Anthony Albanese signed an agreement to enhance cooperation between the two nations in the crucial minerals and rare earth sector.
During their meeting at the White House, Trump stated, “In about a year, we will have so many critical minerals and rare earths that we won’t know what to do with them.”
Albanese confirmed that the agreement encompasses a series of projects valued at $8.5 billion, which are ready to be initiated. He noted that this rare earth and critical minerals pact would elevate the economic and defense collaboration between the two countries to a “new level.” The leaders indicated that the agreement includes rare earth processing in Australia. Albanese added that Australia has the capacity to expand rare earth processing. They also agreed to cooperate on pricing, approval processes, and government reviews of company and project sales.
Investment Figures Diverging Albanese stated that the first phase of this agreement would commence within the next six months, with both the U.S. and Australia each investing over $1 billion in preliminary projects, followed by additional projects and plans to jointly develop a new initiative with Japan. The document did not disclose the specific financing parties. However, information released by the White House later indicated that the two nations would invest over $3 billion in critical minerals projects within the next six months.
The White House also noted that the Export-Import Bank of the United States would issue seven letters of intent for financing, totaling over $2.2 billion, potentially unlocking up to $5 billion in investments. It remains unclear why there is a discrepancy between Albanese's remarks and the White House's statement.
According to the White House, as part of the agreement, the U.S. Department of Defense will fund the construction of a high-end gallium refining plant in Western Australia with an annual capacity of 100 tons. The Export-Import Bank of the United States will also issue financing letters worth over $2.2 billion for the critical minerals project.
This meeting marked Albanese's first visit to the White House since Trump resumed office. Reports indicate that Albanese aims to leverage Australia's resource advantages in critical minerals to solidify relations with the U.S. Australia holds the world's fourth-largest rare earth reserves. Sources disclosed that negotiations had already taken place prior to Albanese's visit, with representatives from over ten Australian mining companies meeting with various U.S. government officials in Washington last month. The U.S. side indicated that it was considering equity-like investments in Australian mining companies.
Australian Treasurer Jim Chalmers met last week in New York with U.S. investment firms such as Blackstone Inc. and Blue Owl Capital to promote Australia as a “stable, resource-rich” investment destination and a key supply chain partner. There are widespread expectations that the U.S. and Australia will engage in deeper negotiations, with Australia providing a secure supply of rare earths and strengthening U.S. capacity. This outlook has also boosted investor enthusiasm, with companies like Lynas seeing stock prices rise over 150% in the past year.
U.S. Calls on Australia to Increase Defense Spending, Australia Yet to Agree Trump mentioned on Monday that the two leaders discussed “trade, submarines, and other military equipment,” indicating that national security issues were a significant focus during their talks. Trump requested Australia to raise its defense spending from the current level of approximately 2% of GDP to 3.5%, although the Australian side has yet to agree.
The White House stated that Australia agreed to purchase $1.2 billion in underwater drones and signed a $2.6 billion agreement to acquire Apache helicopters, with the first batch to be delivered soon.
Another key topic was the submarine sales plan under the AUKUS security pact. According to this agreement, the U.S. plans to sell up to five Virginia-class nuclear submarines to Australia in the early 2030s, after which Australia and the UK will jointly design and build a new generation of submarines, some of which will utilize U.S. technology, expected to be completed in the 2040s.
The AUKUS agreement was signed by the administration of former President Biden in 2021, with the submarine project being central to its content. However, the Trump administration is currently reviewing the pact to determine whether it aligns with the “America First” agenda, raising concerns that Trump may abandon the plan.
Despite this, officials from Australia and the UK downplayed the possibility of abandoning the plan. Trump also suggested that the submarine sales would continue to move forward.
When asked if the sales process would be expedited, Trump replied, “We’re doing that. We have the best submarines in the world, and we’re building more, and everything is in order with Anthony (Albanese).”
Trump praised the military cooperation between the U.S. and Australia but indicated that it is unlikely to provide Australia with tariff relief. Australia has consistently sought trade tariff concessions due to its trade deficit with the U.S. Currently, Trump imposes a 10% tariff on Australian goods, which matches the tariff baseline for most countries.
Trump stated, “The tariffs that Australia is paying now are very low—very, very low.”
