Trump makes big claims, U.S.-Australia experts pour cold water: Rare earth supply chain does not depend on China, at least 10 to 20 years

In recent years, the U.S. and Western countries have coveted China's rare earths, striving to establish alternative supply chains, and have viewed Australia, which has rich mineral reserves, as "the hope in the village." The U.S. and Australia recently signed a mineral agreement, and President Trump boasted that the U.S. would have a large amount of rare earths "in one year."

However, according to an analysis by Australian and U.S. experts cited by Hong Kong's South China Morning Post on the 21st, it will take the U.S. 10 to 20 years to build a safe and independent supply chain.

On the 20th, Trump met with Australian Prime Minister Albanese at the White House and signed an $8.5 billion key minerals agreement.

The report pointed out that this U.S.-Australia agreement "aims to counter China." According to the copy of the agreement released by both governments, the two countries will each invest $1 billion within the next six months for mining and processing, while setting a "price floor" for key minerals.

The White House announced in a statement that this framework represents the efforts of the two countries to further "accelerate the secure supply of key minerals and rare earths." The statement mentioned that the signatories of the framework will work to protect their respective domestic key minerals and rare earth markets from so-called "non-market policies and unfair trade practices," including using a "standards-based system."

After the agreement was signed, Trump raised a glass of champagne in advance. He told reporters that day, "In a year, we will have so many key minerals and rare earths that you won't know what to do with them."

On the 21st, Chinese Foreign Ministry spokesperson Guo Jia Kun answered related questions, pointing out that the formation of global production and supply chains is the result of market and corporate choices. Countries with key mineral resources should play an active role in ensuring the safety and stability of the industrial and supply chains, and ensure normal trade and economic cooperation.

The U.S. think tank "Center for Strategic and International Studies" (CSIS) released an analytical report on the 20th stating that Australia has 89 active rare earth exploration projects, exceeding Canada, Brazil, and the United States. In recent years, Australia has heavily invested in processing capacity, and last year it was the top destination for rare earth exploration, attracting about 45% of global investments.

Professor Zhang Chunxin from the School of International Finance at Fudan University stated that if the private sector participates, commercial sales of rare earths under the U.S.-Australia framework may appear within two to three years, and China may respond by providing competitive agreements to Australia.

Stuart Orr, Executive Dean of Melbourne Polytechnic in Australia, predicted that under the first wave of "waves" dependent on existing mines, sales under the U.S.-Australia framework could be realized within two years. However, he pointed out that commercial sales in the "second wave" after new production facilities are put into operation will take at least 10 years to achieve. He added that establishing a stable key mineral supply chain independent of China will also take the U.S. at least 10 years.

"Such agreements are significant, this is a good beginning," said Pinny Alhous, CEO of Cove Capital, a U.S.-based rare earth metal investor and developer. He claimed that the U.S. will later sign similar agreements with other countries. As these agreements mature, China may become "more worried."

Alhous added that the U.S.-Australia framework agreement will help the U.S. by obtaining Australian key mineral technologies. In addition, the procurement agreements and "price floor" of the agreement will make it harder for China to compete in mineral prices.

However, Alhous estimated that it may take the U.S. 20 years to achieve a "completely safe and independent supply chain."

Original: www.toutiao.com/article/1846656513537033/

Statement: This article represents the views of the author.