US enlists Australia to secure rare earths supply

Half a tonne of rare earths

Australia’s defence capability is affected through the staged purchase of F-35 Joint Strike Fighters from US, which have been reported to contain around half a tonne of rare earths.

Australia is set to take delivery of 72 of the advanced fighter jets over the next decade, leaving Canberra vulnerable to any move by Beijing to cut off rare earth exports.

China controls at least 80 per cent of the global trade in rare earths and has threatened to slash exports in retaliation for US President Donald Trump levying fresh tariffs against Beijing.

Sources have confirmed a report by The Financial Times that the US State Department is working with Canada and Australia to better understand what critical minerals each country has and how these can be developed.

The three countries have sought to bring together high-level government support for reducing the reliance on China for strategic materials.

Australia’s response to the US call to arms has seen Austrade put together a prospectus of so-called “critical minerals” which could be developed with the help of capital from the US, Europe, Japan or South Korea.

To speed these developments Austrade has led trade delegations to the US and north Asia and will take another group to Europe later this month.

Arafura one winner

Geoscience Australia and Australia’s Nuclear Science and Technology Organisation have also been involved in coordinating Canberra’s response.

The strategic weakness of the US and its allies is seen as a commercial opportunity for Australia, which is rich in rare earths but has struggled to find investors for the capital-intensive projects.

One company which could benefit is junior miner Arafura Resources which is seeking funding for its $1.1 billion rare earths project outside Alice Springs in the Northern Territory.

It is pitching itself as a reliable supplier to the US and its allies and an opportunity for Japanese, Korean, European or American manufacturers to no longer be hostage to Chinese supply.

Arafura is seeking funding from the Northern Australia Infrastructure Facility, which has so far struggled to find suitable projects.

The NAIF is currently conducting due diligence on Arafura’s project, which is hoping to secure funding over the next six months.

While the development of this project has national security implications, Resources Minister Matt Canavan said the NAIF was an independent body and cannot be directed by the Minister to invest in a specific project.

“Nonetheless, I encourage the NAIF to support investments in new opportunities in the resources sector,” he said.

“The NAIF has invested in lithium, mineral sands and potash projects to date and has others under assessment.

“In addition, under the NAIF Act, the Minister can only reject an investment on limited grounds, one of which covers Australia’s national interest.”

In response to China’s threats to use rare earths as a bargaining chip in its trade war with the US, Commerce Secretary Wilbur Ross has promised “unprecedented action” to ensure America is not cut off from supply.

This followed China’s National Development and Reform Commission saying last week, local “experts” had advised the government to “strengthen export controls” of rare earths.

This could lead to a shortage of rare earths for manufacturers operating outside China in products as diverse as headphones to power tools and fridges.

Source link Finance News Australia

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