US looking to work closer with Australia on ‘rare earths’ development
A major new report has found US trade and investment contributes 7 per cent of Australia’s GDP, with the need for strong trade ties growing.
The US is looking to work with Australia to boost production of rare earths and other critical minerals, according to the US Ambassador to Australia, Arthur B. Culvahouse Jr.
Speaking at the launch of a new report on US economic ties with Australia, Mr Culvahouse said the potential for improved co-operation between Australia and the US on critical minerals would be discussed next week at high level ministerial talks in Washington.
“There is an added impetus for us to work together in the area of critical minerals,” he said.
“Australia has most of the 14 critical minerals.”
“Australia has people with processing expertise and we have capital markets,” he said.
“There is a real opportunity for us to work together. Critical minerals is a real test case (for future economic co operation).”
Mr Culvahouse was speaking before leaving for Washington on Wednesday ahead of the annual AUSMIN talks next week between the Australian Minister of Foreign Affairs, Marise Payne, Australia Defence Minister, Linda Reynolds and US Secretary of State Mike Pompeo and US Defence Secretary, Mark Esper.
“Critical minerals are only becoming more critical,” he said.
“Both our countries will benefit from more robust, transparent and standards-based supply chains.”
Mr Culvahouse was speaking at the launch of the report Called Building Prosperity: The importance of the United States to the Australian economy, which argues that the US is Australia’s most important “economic partner”, a relationship contributing as much as seven per cent to Australia’s economic growth.
He said US economic ties with Australia would continue to increase with almost half of US companies in Australia expecting to increase their investments over the coming year.
In his speech he made a veiled reference to recent comments by the Chinese Ambassador to Australia warning that Australia’s exports to China could suffer as a result of Australia’s push for an inquiry into the origins of COVID-19.
Seeking to contrast Australia’s ties with China with those of the US, he said “Australia will never see the day when a US ambassador threatens to withdraw from trading with and investing in Australia.”
“Recent events have shown starkly that economic security is national security.
“It’s not just about the money, it’s who you trust, it’s about shared values.”
The report, by Deloitte Access Economics, argues that Australian exports to the US and the income generated from US investments in Australia collectively contribute $131 billion a year to Australia’s economy or seven per cent to annual economic growth.
It says US is now the largest single foreign investor in Australia with a total of $984 billion as of 2019, making up more than a quarter of all foreign investment.
The chairman of the American Chamber of Commerce in Australia, Dr Brendan Nelson, said US companies invested $205 billion into Australia in 2019 alone, more than they did into China.
“Reflecting the US confidence in Australia, the US invested 40 per cent more in Australia than it did into China in 2019,” he said.
Half of the new investment went into mining and manufacturing with the bulk of the rest going into professional services, finance and wholesale and retail trade.
Dr Nelson said the report found that some six to 7.5 per cent of Australia’s GDP over the most of the past decade had been “as a direct result of US trade and investment.”
It says there are 323,000 Australians working for some 1,100 majority American owned companies in Australia while another 240,000 Australians are working in the US.
The report notes that Australia’s two way trade with the US of $80 billion in 2019 is almost as much as its trade with the entire European Union.
It notes that “US investment in Australia has been a reliable and consistently growing source of funds that has helped support Australia’s economy for many years.”
The report argues that US investments in the mining sector, including Chevron’s $80 billion investment in the Gorgon and Wheatstone LNG projects in Western Australia, has helped to “drive the surge in LNG exports over the last five years.”
“US investment will again be the key to Australia’s recovery from the 2020 recession, whether in the form of new direct investment or providing finance for businesses and governments to grow the economy,” it says.
Mr Culvahouse said the mainstay of the economic relationship was the investment relationship which stretched back over a century and was “underpinned by core common values like rule of law, transparency, hard work and far play.”
He said the Australia-US economic relationship would be “more essential than ever in generating economic growth and stability” as both countries coped with the COVID-19 pandemic.
“As we emerge from the immediate health impacts of COVID-19, and the focus turns to rebuilding our economies, the US and Australia have much to contribute to each other’s recovery,” he said.
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