The US Government has committed to help fund Australian critical minerals projects through its export financing arms against a backdrop of continued Russian sanctions and China’s supply chain dominance.
The agreement comes as US President Joe Biden prepares to enact wartime powers to boost the domestic supply of minerals crucial for the manufacture of defence equipment and electric vehicles.
Russia’s invasion of Ukraine has highlighted the world’s heavy reliance on Russian oil and gas suppliers and has triggered a severe energy crisis.
Australia and the US have worked on measures designed to impose significant economic costs to Russia, including depriving the regime of access to critical technologies and materials, capital, and the ability to conduct business around the world.
Advanced measures have included an Australian ban on exports of alumina to Russia and other strategies to ensure the country faces appropriate economic consequences in response to the invasion.
Minerals under the microscope
Critical minerals such as nickel and zinc – which are central to energy, defence, electronics and other vital industries – have now come under the microscope as the Biden administration tries to reduce its dependence on overseas supplies.
Australian trade minister Dan Tehan said the US had agreed to help finance Australian projects to speed up delivering much-needed critical minerals for the technology that goes into defence equipment, batteries, smartphones, electric vehicles and other technologies.
“As China produces almost 80% of global critical minerals, western nations including Australia and the US are scrambling to develop alternative supplies,” he said.
“The coming energy transition will depend in large part on securing a resilient and diversified supply of critical minerals for use in everything from electric vehicle chargers and batteries to solar panels, wind turbines, and semiconductors.”
Mr Tehan made the trip to Washington to table the issues with US secretary of commerce Gina Raimondo.
He was accompanied by the heads of Australian critical minerals companies Iluka Resources (ASX: ILU), Australian Strategic Materials (ASX: ASM), Cobalt Blue Holdings (ASX: COB), Lynas Rare Earths (ASX: LYC), RZ Resources and VHM, which are all vying for cheap finance to fast-track their projects.
Supply chain financing
An executive-level round table on critical minerals this week highlighted the commercial potential for Australian and US industry and underscored the need to strengthen capability across all parts of the supply chain, including extraction and downstream processing.
It discussed opportunities to bridge market gaps and enhance the resilience of critical minerals supply chains.
Australia and the US agreed to examine how their respective financing mechanisms could be better coordinated and leveraged to support private investment in supply chains.