(Original title: Someone has gone back: why we don't make money in China...)

► Wen Observer Network Ruan Jiaqi

This week, the U.S. and Australia signed a key mineral deal worth $8.5 billion. The U.S. media that the agreement "was aimed at counter-China."Trump also pleased, arguing at the scene to open champagne, and also with a few glamorous mouths declared that in a year the mineral resources will be abundant to "not know how to handle."

Trump and Albanians sign agreement and shake hands

However, after the carnival, someone suddenly recalled: it was the United States that wanted to build a system that could replace China's supply chain of rare earths and critical minerals. "But why should Australian taxpayers' money be used to solve the problems of other countries?"

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The Financial Times reported on the 24th that analysts pointed out that high energy and labor costs make the construction cost of rare earth refineries in Australia almost five times that of Asia. In order to stimulate the development of the rare earth industry, the Australian government provides subsidies for related projects, such as providing strong support for Western Australia's A$1.8 billion Iluka Resources refinery project. However, whether these subsidies are enough to enable Australia's rare earth products to compete with China remains a big question mark.

The report also mentioned that after the signing of the agreement between the United States and Australia, the stock prices of some Australian mining companies rose sharply, but some small companies still struggled to obtain financing. The reason is still that investors are worried that they can't compete with China's mature and powerful rare earth industry.

Several data show that China dominates rare earth mining production.

On the 20th local time, U.S. President Trump and Australia Prime Minister Albanese met at the White House and signed a key mineral agreement worth US$8.5 billion. US media said the agreement was "designed to confront China."

A copy of the agreement released by the two governments indicates that the two countries will each invest $1 billion in mining and processing over the next six months, while setting a ¡°bottom line¡± for key minerals.

After the agreement was signed, Trump opened champagne in advance. "In another year, we will have so many critical minerals and rare earths that you don't know what to do with them," he told reporters on the same day, adding that Australia has been paying "very, very low tariffs".

On Friday, Australian Treasury Secretary Jim Chalmers told reporters in Washington: ¡°We know that American companies are in urgent need of critical minerals, and Australia is perfectly suited to meet that demand.¡±

Former British Deputy Prime Minister Dominic Raab is now head of global affairs at London-based investment firm Appian Capital. According to the Financial Times, the company has invested in Gippsland Critical Minerals, a key mineral company located in eastern Melbourne.

This former senior British politician who has grossly interfered in China's internal affairs many times during his tenure, still refuses to change his double standard nature and takes sides in favor of rare earth subsidies. At this time, he does not emphasize the power of the market, but instead argues that subsidies are "necessary" to get the rare earth industry started.

When the development of the rare earth market was not conducive to the West, Raab claimed that "the market mechanism was malfunctioning." He added,"The challenge facing the entire Western world is how to build these supply chains."

However, international industry experts generally believe that although Australia has a large amount of rare earth reserves, its production infrastructure is still underdeveloped, making processing relatively expensive and its talent reserve is not as good as that of China. Some scholars say that it will take 10 to 20 years for the United States to establish a safe and independent supply chain.

Marina Zhang, a critical minerals researcher at the University of Technology Sydney, Australia, said frankly: "Even if the United States and all its allies make rare earth processing a national project, I would say it will take at least five years to catch up with China."

Philip Ivanov, an Australian geopolitical scholar and founder of the consulting firm Geopolitical Risk and Strategic Practice, also agreed that the key minerals agreement with the United States and Australia lacks details and that it could take decades for the two countries to compete with China.

He is more worried about China's ability to take "disciplinary" measures, including a direct embargo on Australia iron ore mines.

Chinese flag and Australian flag data map

The report mentioned that China is Australia's largest trading partner, accounting for nearly one-third of Australia's exports. According to Australian government data, the trade volume between the two countries rose to nearly $202 billion last year.

¡°Will China punish (Australia)? will it impose import restrictions on Australian iron ore? or will China take other ¡®asymmetric¡¯ responses and affect bilateral relations in other areas?¡±

"Pricing will also be the key issue, and China will not sit idly by and watch the US and Australia undermine its current competitive market position," he added.

Regarding the US-Australia critical minerals agreement, Chinese Foreign Ministry spokesperson Guo Jiakun responded on the 21st that the formation of the global production and supply chain is the result of market and enterprise choices. Countries with key mineral resources should play an active role in ensuring the security and stability of industrial and supply chains and ensure normal economic and trade cooperation.