The United States and Australia finalized a framework agreement on the supply of key minerals and rare earths on October 20, 2025, which made the global supply chain lively.

Not long after Trump took office in the United States, he pulled Australian Prime Minister Albanese to sign it at the White House, with a total value of 8.5 billion US dollars. The two sides agreed to invest 1 billion US dollars each within six months for mineral mining and processing.

Australia has a lot of rare earth resources, and the United States wants to get rid of its dependence on China. After all, China controls most of the world's rare earth production and processing.

Once the agreement was signed, the U.S. government claimed that it could unlock mineral deposits worth US$53 billion in order to become self-sufficient in key minerals. The Australia government directly injected US$100 million into the Arafura rare earth project.

After signing, Albanese said that this would strengthen the supply chain security of the commercial and defense industries of the two countries. Trump stressed that this move can make the United States stop looking at other people's faces, and the goal is that the supply of rare earths will be inexhaustible within one year.

Kevin Hassett, director of the White House National Economic Council, said that the agreement will play a key role in breaking China's dominant position in rare earths, and Australia mining stocks rose a lot that day.

Although the agreement has been signed, the actual effect has to be questioned.Most of Australia's rare-earth projects are still in the initial phase, many are only feasibility studies, and the real production has to wait at least a few years.

Although the United States has found new suppliers, it is not able to keep up with China¡¯s pace in the field of rare earth in the short term, according to the BBC. China has accumulated 66 years of experience since its first forging of rare earth in 1959.

Now, China has mastered 90% of the world's separation and processing capacity, and the entire industrial chain is complete from mining to purification. This is not something that can be caught up with by throwing money. It is not difficult for the United States and Australia to overtake in corners.

More troublesome is the energy issue. Rare earth processing consumes a lot of electricity. China's power generation exceeded 10 trillion kilowatt hours last year, accounting for one-third of the world's total, which supports the entire industry.

The NERC warns that half of the U.S. could face power shortages and even frequent power outages over the next decade.

Experts analyze that even if the United States brings together more than 30 allies for research and development, it will take at least five years to narrow the gap with China. In the past five years, China's technology has still been upgrading and will not remain in place.

The European Union originally followed the United States to guide the country on the rare earth issue, but when the agreement came out, they were dumbfounded. The United States and Australia gather together to keep warm, without bringing the EU to play, nor sharing their share of resources. The EU previously cooperated with the United States to put pressure on China's rare earth policy, but now it has become an outsider.

China tightened rare earth export controls on 9 October 2025, including government permits for exports of five elements, and added censorship for semiconductor uses.

This directly hits the pain point of the EU. Their automobile, chip, and wind power industries are highly dependent on rare earths, and there are almost no substitutes for new energy vehicles and wind energy magnetic materials. German car manufacturers and French wind power companies immediately felt the pressure on the supply chain, with procurement costs rising and production pace slowing down.

EU Trade Commissioner Maroš Šefčovic called Chinese Commerce Minister Wang Wentao on October 21, 2025. Sevcovic invited Wang Wentao to visit Brussels, stressing that the EU does not want the situation to escalate and hopes to find a solution.

Wang Ventao agreed to strengthen communication, and the two sides agreed to hold an upgraded version of export control dialogue. Shef Chovie said after the incident, the case shaded China-Europe relations, but the EU is willing to resolve through dialogue.

Wang¡¯s visit to Europe is scheduled for completion in the coming weeks, with a focus on rare-earth export restrictions and mutually beneficial agreements.

The EU enterprise's procurement of high purity rare-earth chip plants is hindered, the inventory of the automotive production line is pressing, and the risk of delaying wind power projects increases.

The EU held a meeting to discuss, and the representatives of member states admitted that they had made a misjudgment. They used to think that the United States would get a piece of the pie by taking sides, but they turned out to be tool people.

The path choice is also wrong. Following sanctions will intensify China's defense, and now it will run out of food first. The industrial dependence is too high, and the technological advantage lies in high-end manufacturing, but there is no alternative for rare earth bottleneck resources.

China's rare earth control is not about arbitrarily getting stuck, but about maintaining industrial security and promoting global supply chain compliance.

The International Energy Agency commented that new export controls made supply centralization risks real, but China stressed that this was a legitimate move.

Through this incident, they began to reflect on whether it was unrealistic to talk about independence and controllability without China. The global industrial chain is deeply integrated, and decoupling is even more difficult.

Although the US-Australian agreement advances, it is difficult to shake China's position in the short term.The Australian government continues to invest in the project, and the United States considers additional support, but the electricity bottleneck and capacity building time are hard injured.

Trump insists on trade protection and promotes the return of manufacturing industry, but in reality rare earth processing is not easy. The global competition for rare earths has entered a new stage, and the cooperation between the United States and Australia is the starting point, but it will not soon shake China's dominance.

At the enterprise level, EU companies adjust their procurement strategies to look for diversified sources, but short-term reliance on China is difficult to change.

References:

1. The United States and Australia reach rare earth agreement Blue Whale News 2025-10-23

Rare-Earth Shares in Australia Rise U.S. and Australia Sign Key Mineral Agreement 2025-10-21