U.S. Moves Decisively to Avoid Dependence on China’s Rare Earths
The Pentagon’s support for MP Minerals follows China’s imposition of export controls on rare earths and magnets in retaliation for US controls on chip exports and the Trump administration’s tariffs. It resulted in an effective embargo on sales to the US.
It mirrors the Japanese support for Lynas in the wake of China’s first use of rare earths as an economic weapon with a brief embargo on sales to Japan amid a dispute over the Senkaku Islands in 2010.
A week after the embargo was lifted, the Japanese and Australian governments signed an agreement on rare earths supply and the Japanese trading company Sojitz arranged US$325 million in finance for Lynas which would provide the Japanese market with rights to 9,000 tons of rare earth oxides a year for a decade. Finance for those sales would be provided by the state-owned Japan Oil, Gas and Metals National Corporation, JOGMEC.
The Trump administration has at times appeared to have a scatter-gun approach to rare earths, variously pitching to annex Canada and Greenland and appropriate Ukraine’s untapped reserves as payment for past military aid and extracting a promise of access to the rare earths reserves of the Democratic Republic of the Congo and Rwanda in return for brokering a peace deal between the two.
Australia has been trying to elicit US government support for Australian rare earths projects ever since the period of the first Trump administration. One tangible outcome was a US Department of Defense agreement in 2020 to provide US$288 million to fund a joint venture between Lynas and US chemicals company Blue Line to build a separation plant in Texas for heavy rare earths. That was supposed to have been completed by 2025–2026, however site development has been frozen over an issue with wastewater permits.
As part of AUKUS’s enabling legislation, the US Congress agreed in late 2023 to make Australian and British companies eligible for Defense funding.
The Australian government had hoped that an offer to guarantee US access to Australian critical minerals would lead the US to drop its 10 percent tariff on imports from Australia and bring an influx of US investment. The offer was rejected.
The US government’s preference, revealed in its deal with MP Materials, is to prioritize US interests. In July 2023, The Strategist published an article by Georgetown University academic Shubham Dwivedi and US critical mineral analyst Greg Wischer arguing that US should be prepared to fund mines in Australia for minerals that were not readily available in the US or Canada but that any US investment in refining or further processing should be located in the US.
That article should be required reading for anyone wanting to understand where Australia sits in the Trump administration’s critical minerals policy. Wischer is now deputy chief of staff for policy at the US Department of the Interior with charge of critical minerals policy.
David Uren is a senior fellow at ASPI. This article is published courtesy of the Australian Strategic Policy Institute (ASPI).
