By David Crowe
Federal ministers will ramp up a furious lobbying effort to spare Australia from crushing tariffs after United States President Donald Trump launched a global fight over trade, pointing to Chinese curbs on critical minerals to help their case.
The Albanese government will cite the new Chinese export controls, which will limit the supply of key metals needed in defence and consumer electronics, as proof the United States is winning from the Australian security alliance and trade relationship. Australia is a major supplier of rare earths.
A rare earths plant in Kalgoorlie, Western Australia, run by the Australian company Lynas.Credit: Bloomberg
With Australian companies already gaining investment from the US Department of Defence to expand production of lithium and other rare earths, the Chinese move is seen in Canberra as a sudden shift that will increase American demand for Australian supplies.
The move comes as Defence Minister Richard Marles heads to Washington, DC on Thursday to meet US Secretary of Defence Pete Hegseth, amid hopes Trump will spare Australia from trade pain because of the AUKUS pact and broader security alliance.
Resources Minister Madeleine King said she had spoken to the Australian ambassador in Washington, DC, Kevin Rudd, about the case for stronger cooperation with the US on critical minerals to avoid the damage from “market manipulation” by China.
“We will be talking with the American administration as clearly and as soon as we can,” she said.
Trump is yet to name cabinet posts for portfolios such as resources and trade, which means King and Trade Minister Don Farrell cannot initiate talks with their counterparts, highlighting the importance of Marles’ visit to see Hegseth.
Foreign Minister Penny Wong held talks with US Secretary of State Marco Rubio in the US capital on January 21, with critical minerals among the subjects discussed.
“Penny Wong has already spoken to Secretary of State Marco Rubio about this very topic,” King said on Wednesday.
“I imagine Richard Marles will be doing exactly the same thing when he goes to the US as well, because we all know how important that link between Australia and America is on many fronts, but particularly in the critical mineral space.
Credit: Matt Golding
“It is a strong link with the Americans. It is a pro-American policy. We want to diversify our supply chain, and the way we will do it is with the assistance of the US and their investment.
“It will also assist other partners and friends like the Japanese, who have borne the brunt of some of those export controls out of China for a long time.”
Australian company Lynas has an agreement with the US Defence Department to set up a facility in Texas, under a program worth $US288 million.
American company Albemarle struck an agreement with Mineral Resources last year to buy 50 per cent of the Wodgina lithium mine in the Pilbara region of Western Australia for about $1.6 billion.
The federal government has backed Australian rare earths projects with grants, loans and debt guarantees to build up the industry in the face of fierce competition from China, which dominates supplies and prices.
“We need this stuff to be processed and go into the things we need and want, whether that be computer chips, semiconductors, phones or magnets for cars,” King said.
“Yet the companies are struggling, and that’s because of the impact of international market manipulation.”
King said the Chinese move highlighted the need for the production tax credits being debated in parliament this week, after the government unveiled the financial support for the industry in the May budget last year.
Opposition Leader Peter Dutton opposes the production credits despite calls from the industry to pass the bill before the election.
“It really is staggering that they are avoiding the national security part of this,” King said in an interview.
Dutton has dismissed the production credits, however, and argued there were “finite tax dollars” in federal coffers to support industry, but he has also signalled other support for the industry.
“I give you this commitment: a Dutton Coalition government will be the best friend of the mining and resources sector in Australia will ever have,” he told industry chiefs last September.
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