US-Australia signs $8.5 billion key mineral agreement
The Wind / Wind

After China announced rare earth export controls and stuck the neck of American high-tech industries, Australia jumped out to "share worries" with the United States, ready to break China's monopoly position in one fell swoop.

According to multiple foreign media reports on October 21, on Monday local time, US President Trump met with visiting Australia Prime Minister Albanese at the White House, during which the two sides discussed a series of trade and military cooperation issues. It is reported that the biggest achievement of the US-Australia talks was to reach a rare earth supply agreement worth US$8.5 billion.

Under the agreement, the U.S. will invest more than $3 billion in Australian-based rare-earth mining projects over the next six months, and the expected value of available rare-earth minerals will exceed $53 billion, while the U.S. military will also invest in a rare-earth processing plant in Australia, which is expected to produce 100 tons of magnesium per year, which is a key raw material for producing electronic equipment such as radar.

After signing the rare earth supply agreement, Trump was obviously carried away. He said that almost a year later, the rare earths and other key minerals acquired by the United States will be "too many" to use up, so that he doesn't know what to do with them. Haschett, director of the White House Economic Council, believes that Australia can play a key role in weakening the world's dependence on China's rare earths.

As we all know, China has the largest rare earth reserves in the world, and also has the most complete rare earth mining and refining industrial chain. It occupies a dominant position in the upstream and downstream industries of rare earths. Rare earths have an irreplaceable role in modern industries, especially high-tech industries. It is often used in high-tech industries such as semiconductors and military industries. Therefore, after China announced rare earth export control measures, it accurately attacked the weakness of the U.S. high-tech industry, making the Trump administration feel more difficult.

In this context, the United States announced an agreement with Australia on the supply of rare earth, apparently coming from China, and the United States hopes to send a signal: don't think that the United States will not turn away from China's rare earth supply chain, the world has rare earth countries, Australia can break China's monopoly on the supply of rare earth.

However, can the United States really rely on Australia to break China¡¯s rare landmark on this?

First, Australia is indeed one of the world¡¯s richest countries with rare-earth resources, with the country¡¯s estimated global rare-earth reserves accounting for about 3 to 4 percent of the world¡¯s total, after China, Vietnam and Russia. But the problem is that Australia¡¯s rare-earth mining and refining processing capacity is far behind China, and most of the refining processes must be completed in China. Even though the United States and Australia have attempted to set up local separation and refining facilities in recent years, progress has been slow due to high costs, stringent environmental requirements and huge technological barriers.

In other words, although the cooperation between the United States and Australia may seem aggressive, it is almost impossible to "start a new stove" in the short term and create a complete rare earth supply chain that excludes China. The key to the rare earth industry is not just "ore", but the entire industrial chain from ore extraction, separation, smelting to precision material processing. This system took China decades to establish, and behind it is complete technology accumulation, policy support and industrial ecology. Even if Western countries are willing to invest heavily, it will be difficult to catch up with the mature system formed by China within a few years.

Ironically, the U.S. and Western media have been rendering the so-called ¡°China Rare-Earth Monopoly Threat¡± for more than a decade, but there is still no substantial breakthrough so far. Whether Japan, Australia or the U.S. indigenous projects are defeated in the face of cost and efficiency. This in itself shows that China¡¯s position in the field of rare-Earth is notined by ¡°resource monopoly¡±, but by the structural leadership cast by technological and industrial advantages.

Trump now boasts that "there are too many rare earths to be used up", but it is actually just political rhetoric. The reality is that even if the United States and Australia can dig out rare earths, they may not be able to turn mines into chips or radars. China dares to play the rare earth card precisely because it has enough confidence and strength. If the US side doesn't believe in evil, it might as well give it a try, and reality will teach them a good lesson.