The new Australia-US critical minerals pact will turbocharge efforts to build China-free supply chains and help weaken Beijing’s stranglehold on the sector, former senior diplomat Paul Myler says.
But Mr Myler, who served five years as deputy chief of mission at the Australian embassy in Washington, says securing the breadth of elements essential to modern technology will remain a challenge.
“The thing we have to acknowledge is we walked away from this area 20 years ago,” said Mr Myler, who now runs Perth-based geopolitical risk advisory firm StratQ.
“The Chinese have spent 20 years refining their technology and it’s really hard to sort of jump in and kick start this research now to catch up with them. They have a technical advantage at the moment.”
Mr Myler, who served under former Ambassadors Joe Hockey, Arthur Sinodinos and Kevin Rudd, made the comments after the release of the landmark agreement on Monday (Tuesday AEDT).
Speaking on the Commercial Disco podcast, Mr Myler said the “important agreement” would build on earlier efforts to support Australian miners like Lynas Rare Earths and Iluka Resources.
Lynas Rare Earths, Australia’s largest rare earths producer by market capitalisation, and Iluka Resources, have both previously received backing from the federal government.
“I think we’ve just seen this turbocharged, both the rationale for why it needs to happen, and the government willingness to get involved in industrial policy and make sure it does happen,” Mr Myler said.
Tuesday’s agreement will see US$200 million funneled into the Alcoa-Sojitz Gallium Recovery Project in Western Australia, and US$100 million into the Arafura Nolans project in the Northern Territory.
It is part of a US$8.5 billion package of public and private funding for priority projects over the next six months that Mr Mylersaid would help create “modest, targeted production that breaks China’s monopoly control”.
That, he said, would be achievable in a “relatively short term”, while acknowledging more work would be needed to tackle China’s control of much of the critical minerals and rare earths marketplace.
“The challenge is the breadth of the elements that are required. A lot of the current refining capacity that’s ex-China has been targeted at … key high value things like the inputs for permanent magnets,” Mr Myler said.
“Once you take one step away from them, and you’ve got to design a whole new flow sheet for something like yttrium, for example, it becomes commercially much more complicated.
“We probably need to kick a fair bit of money towards really researching the flow sheets and how to design them so we can extract all of the possible value out of these rare earths, and indeed out of tailings and stockpiles.”
Mr Myler said the agreement was also designed to protect Australia and the US from unfair trade practices, such as China “dump[ing] supply on the market, to crash prices so that any competitors are put out of business”.
The US-Australia Critical Minerals Supply Security Response Group, in particular, was a “great initiative” from the agreement, allowing the two nations to meet at short notice to discuss emerging issues.
“The thing with the Trump administration, certainly in Trump one and it looks the same in Trump two, is nothing dies in committee,” Mr Myler told InnovationAus.com.
“They lean into risk. They’re willing to move. They’re willing to carry risk as a government and they’re willing to intervene in markets in a way that’s sort of atypical and untraditional, but in this particular instance, pretty important.”
Alongside the critical minerals framework, the US and Australia also agreed to develop and launch a bilateral Technology Prosperity Deal to “cooperate and invest in AI, quantum and other critical technologies”.
Mr Myler said that the agreement mirrors that of the recent US-UK Tech Prosperity Deal, which committed £31 billion from US companies like Microsoft, Google and Salesforce.
He said that while it would have been great to see this detailed further, the White House only has limited bandwidth, and it was important to “walk in and out with these two major sort of announcements in our pocket”.
“If you try and cover the entire universe of mutual interest, we may not have had enough time to sort of nail a few things to the wall, and on this occasion it’s more important to have nailed a few things to the wall,” he said.
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