Trump is trying to break China’s monopoly on rare earths, but can’t cut deals fast enough to catch up

John Liu

Source Link

As Beijing weaponizes its dominance over rare earths supplies, US President Donald Trump is cutting deals to try to break the stranglehold. But his claim that America will have an abundance of the critical minerals in just one year’s time may be a fantasy.

“In about a year from now, we’ll have so much critical mineral and rare earths, and you won’t know what to do with them,” Trump said Monday, after unveiling a $8.5 billion agreement to help Australia develop rare earths projects and secure United States access to those elements.

China controls more than 90% of the global output of refined rare earths, which are used to power everything from iPhones to electric vehicles, and this near-monopoly has become one of its most potent tools in its trade war with the US.

Rare earths emerged as a major sticking point between China and the US earlier this year after Beijing imposed unprecedented export controls on the critical minerals, which led to shortages worldwide, disrupting supply chains.

China’s move this month to tighten control of even trace amounts of China-processed rare earths in other countries sent shockwaves through global manufacturing and prompted Trump to threaten 100% tariffs on Chinese goods –– adding fresh uncertainty to the already tumultuous relationship between the world’s two largest economies.

Under Monday’s deal, the US and Australian governments intend to invest, in the next six months, more than $3 billion in critical minerals projects, expected to yield a value of $53 billion, the White House said. It is unclear when production from the new projects will begin.

As part of the agreement, the Pentagon will also invest in the construction of a 100 metric ton-per-year advanced gallium refinery in Western Australia. And the Export-Import Bank of the United States is issuing letters of interest for over $2.2 billion in financing for critical mineral projects.

The deal has the potential to put Australia in an even more awkward position with its largest trading partner, China. While trying to keep Beijing on side, Canberra has also been bolstering defense ties with Washington amid China’s growing influence in Asia-Pacific.