US-Australia rare earth deal targets China's stronghold

The US and Australia have taken a major step in trying to break China's chokehold on the world's supply of critical minerals.

They have signed an $8.5bn (£6.3bn) deal to develop mining and processing technology together. They will spend $1bn in the first six months.

This is a major shot across the bow at China, it controls 70% of the world's supply of these minerals and 90% of its processing. It makes Australia the US' most important partner in critical minerals.

The Centre for Strategic and International Studies (CSIS) in Washington, DC, says that last year, Australia was the world's top destination for rare earth exploration, accounting for almost half the world's investment. The deal comes just days after China announced tough new export restrictions on critical minerals, the processing technology and permanent magnets.

Watch more: Video: Inside the rare earth metals China controlsChancellor challenged by Ed Conway over rare earths blow Director of the CSIS Critical Minerals Security Program, Gracelin Baskaran, says the latest salvo from Beijing was a shock to Washington. US President Donald Trump was outraged and threatened a tariff of 100% on China, starting from November 1.

China has been able to leverage its dominance to threaten countries that depend on its production. These elements are in everything from laptops, to mobile phones, electric vehicles and advanced weapons systems.

We cannot live without them. Mr Trump has zeroed in on critical minerals as a major national security issue.

He has his sights set on Greenland, the Democratic Republic of Congo and Ukraine for further deals. Australian Prime Minister Anthony Albanese has been waiting to get a face-to-face meeting with Mr Trump for months.

Read more: UK suffers blow in bid to become minerals superpowerChina tightens control of supply chain ahead of Trump talks It has finally come through, and a big deal has been inked. For the Albanese government, this is a successful day.

Australia is now a key player in the rare earths race..