ASX rare earth shares such as Arafura Rare Earths Ltd (ASX: ARU) jumped after the US and Australian governments made an agreement.
Australia-US rare earth agreement
The US President Donald Trump and Australian Prime Minister Anthony Albanese have signed an agreement for “critical mineral and energy dominance”.
According to reporting by various media, including the ABC, it will lead to billions being invested into mining projects in the US and Australia.
Mining companies will be able to apply for financing for projects that would produce resources needed for various uses including weapons, electronics and renewable energy.
It was also announced that financing from Australia and the US War Department had been agreed for the first project under the scheme, which is the development of a gallium refinery in Western Australia under Alcoa-Sojitz. The Alcoa Corporation CDI (ASX: AAI) share price is up more than 7% following this news.
The refinery is expected to produce about 100 tonnes of gallium a year.
The Australian and US governments intend to invest US$3 billion in the next six months and work on a pipeline of critical projects in most states and territories in Australia.
In exchange for the financing, the Australian and US governments will, according to ABC reporting, be able to gain a stake in those built facilities and be granted a right to some of the rare earth supply will be available to Australia and the US.
The motivation is to unlock more sources of supply outside of China.
Other potential projects
Another possible joint investment is the NT Nolans project to produce neodymium. This is owned by Arafura and the share price has jumped more than 9%.
The ABC also reported that other potential investments include titanium and zircon projects in Victoria, Queensland and NSW. A Queensland graphite mine is also under consideration.
Overall, this is a promising development for the companies involved.
