One year ago, Australia and the United States signed the Critical Minerals Framework. At the White House ceremony, President Trump and Prime Minister Albanese promised an accelerated pipeline of priority projects. Soon afterwards, the US Export-Import Bank announced seven letters of interest worth more than US$2.2 billion for Australian projects. The figures made headlines. But EXIM defines a letter of interest as a non-binding indication that it may consider financing after a limited review.

One year later, the public record of conversion into binding agreements remains incomplete and opaque. My research, based on 34 interviews with industry, government and academic participants and an analysis of contracts and official financing records, finds that the partnership is real but the bargain is asymmetric. The United States offers limited, conditional support in return for secure supplies of rare earths outside Chinese control. Australia bears the financing and price risks and the opportunity cost of restricting business with China, with no guarantee of moving up the global critical-minerals value chain.

Yet the framework does not itself deliver industrial upgrading. Progressing beyond mining into chemical separation and refining, metals and alloys, magnet manufacturing and customer qualification requires greater tacit knowledge, more specialised engineering skills and denser industrial ecosystems than Australia currently possesses or can quickly build on its own. Canberra therefore needs policies that convert announcements into binding contracts, build domestic knowledge and skills and diversify customers and partners.

Different vulnerabilities

Rare earths are used in small quantities in electric vehicles, wind turbines, robotics and defence systems, but they are chokepoints in technology supply chains. The main constraint is not geology but processing. China is more than a resource supplier. It occupies crucial positions in processing, technology, price formation and downstream manufacturing. In 2024, China produced about 91% of the world’s refined rare earths and 94% of the world’s sintered permanent magnets, according to the International Energy Agency. Diversification matters because China’s processing dominance gives it the capacity to convert supply-chain concentration into political and commercial leverage.

The United States has a supply-side vulnerability. It worries about interruptions to supply and about whether it can trace and secure enough inputs for its defence industry. Australia’s vulnerability lies in demand and bankability. It lacks a large enough domestic manufacturing market and long-term buyers, and its processing ecosystem is not yet competitive. For Australia, China is therefore both a strategic risk and an important customer, processor and price setter.

The US–Australia Critical Minerals Framework brings together two partners with different objectives. The US wants secure inputs for defence and advanced manufacturing. Australia wants customers, skilled jobs and the capacity to separate, refine and process minerals at scale and at a competitive cost. These objectives overlap, but they are not the same.

To achieve its strategic goals, US policy favours domestic value creation. Washington may support mining, separation and some refining in Australia while preferring to retain metal-making, alloy production, magnet manufacturing and defence qualification in the United States. Such trade-offs seldom appear in alliance treaties. They operate through financing eligibility, procurement rules and informal expectations.

The contrast between two projects is instructive. MP Materials received ten years of price protection and a ten-year purchase commitment for magnets produced in America. The US$400 million non-binding conditional financing commitment to Sunrise Energy Metals’ Syerston project, by contrast, would give the United States a right of first offer over output and would not link the Australian mine to metal-making and advanced manufacturing in the US.

Australia could therefore make a supply chain more secure for the United States while the metals, magnets and customer relationships are built offshore. It would still carry much of the cost of infrastructure, approvals and public finance.

Announcement is not investment

Following each of the seven original EXIM letters through public disclosures, my research finds no publicly available executed financing agreement converting any of them into binding project finance. That finding does not rule out confidential agreements.

Letters of interest may attract investors and lenders. However, for long-term, capital-intensive critical-minerals projects, only executed finance and binding customer contracts make such projects bankable. Those contracts must also reflect project economics. Producing rare earths outside China generally costs more. The resilience premium must therefore be expressed through prices, quantities, take-or-pay obligations and contract duration.

Iluka’s 2026 agreement with a global automotive company provides a useful benchmark. It is binding and take-or-pay, with pricing set at the higher of a minimum or a market-linked price.

Other commitments are less well matched to project timelines. Arafura’s Nolans project has a mine life of at least 38 years, but its customer contracts generally last five to 12 years. The Strategic Reserve’s support for Nolans also remains non-binding.

Two tracks rather than two blocs

Diversification should not create another dependence. Mines and refineries take a decade or more to build and repay. They will operate across several US administrations. Replacing reliance on Chinese buyers with reliance on a single source of US demand, especially defence procurement, would exchange one concentrated vulnerability for another.

The approach should therefore be selective decoupling, not a complete divorce into two blocs. From January 2027, US defence procurement restrictions will cover the entire supply chain, from mining and raw materials through to finished magnets, subject to specified exceptions.

Defence and mission-critical supply chains need trusted capital, complete traceability, qualified suppliers and reserved capacity. Meeting these requirements comes at additional cost, which should be borne by the governments and customers demanding this security.

Civilian markets raise different considerations. They should remain open to a broad customer base, including transparent Chinese participation that confers no control and can be traced and replaced. The two tracks can share Australian mines, refineries, infrastructure and workers. Security need not come at the expense of commercial scale required for the clean energy transitions.

What Australian policymakers should do

Canberra should first convene a multinational buyers’ consortium through the Critical Minerals Strategic Reserve. The Reserve has A$1 billion for project support and A$150 million for selective stockpiling. It can enter into offtake agreements, aggregate demand and use contracts for difference.

Pooling demand from the United States, Japan, South Korea, Europe and Canada would combine US security demand with the manufacturing scale of Asian and European customers in downstream high-tech sectors, including electric vehicles and other energy-transition technologies. Participants would need to agree on minimum purchases, the cost of price support, origin rules and emergency allocation.

Second, Australia should make industrial capability a condition of public support. Faster approvals, public finance and access to strategic resources should secure enforceable commitments on long-term offtake and price protection, and on Australian processing, with technology cooperation, product qualification and workforce training attached. Agreements should include milestones and consequences if promised processing moves offshore.

Third, every security exclusion should come with a commercial replacement. If a new rule removes a source of capital or customers, bankable financing and binding offtake should arrive on the same timetable. A security requirement without a revenue solution is not financeable.

Governments should also publish a reciprocal industrial scorecard for each project. It should record the financing instrument and status, financing agreements executed and funds disbursed, construction milestones, processing locations, binding customer contracts and expected Australian jobs, skills and technology.

Judge the deal by what stays

None of this means the Framework has failed. Some initiatives have moved towards construction, and others have won purchase commitments or price support. But success should be judged by what remains in Australia after the US policy cycle moves on.

Australians are being asked to back this with public money, strategic resources and fast-tracked approvals. They should be able to see who benefits.

Australia is already a trusted supplier. Whether it becomes an indispensable industrial partner to the United States and the wider democratic West will depend on the industrial capabilities it builds, not on the next promise from Washington.

Marina Yue Zhang is Associate Professor at the Australia-China Relations Institute, University of Technology Sydney. Her research focuses on innovation, industrial policy and geopolitics, particularly in the context of China’s technological rise and its global implications. Marina is the co-author of Demystifying China’s Innovation Machine (Oxford University Press, 2022), and her commentary has appeared in the Australian Financial Review, The Conversation and Australian Outlook.

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