‘Generous’ critical minerals offer to win over Donald Trump on tariffs

The Albanese government is offering to turbocharge critical minerals co-operation with the US to win over Donald Trump, including a guaranteed supply chain of processed minerals and investment funds for new projects.

Lynas Rare Earths’ processing plant at Kalgoorlie, Western Australia. Picture: Bloomberg

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The Albanese government is offering to turbocharge critical minerals co-operation with the US to win over Donald Trump and avoid future tariff hits, proposing a guaranteed supply chain of processed minerals and investment funds for new projects.

The Australian can reveal Kevin Rudd laid out the plan to Commerce Secretary Howard Lutnick in multiple meetings ahead of Mr Trump’s tariff decision on Wednesday, and was encouraged by the response.

“We were led to believe by Lutnick that this is what they wanted”, a senior government source said.

The proposal coincided with the President’s pressure campaign to get Ukraine to sign over its critical minerals resources, but it failed to save Australian steel and aluminium producers from his new 25 per cent tariffs.

Trade Minister Don Farrell said: “Australia was offering a comprehensive critical minerals package in exchange for tariff free access to US markets. We were extremely disappointed that our generous offer was not accepted.”

The package remains on the table and will be central to the nation’s case ahead of Mr Trump’s April 2 reciprocal tariffs announcement, which could hit an array of Australian products including medicines, meat, seafood and other food exports.

Trade Minister Don Farrell with Prime Minister Anthony Albanese. Picture: Brenton Edwards

A day after Anthony Albanese blasted Mr Trump’s tariffs as “unjustified” and unfriendly, the government rejected accusations by Mr Lutnick branding Australia a “dumper” of cut-price aluminium.

“You’ve got dumpers in the rest of the world. Japan dumps steel, China dumps steel … we’re going to stop that nonsense and bring steel here,” Mr Lutnick told Fox Business.

“We’re not going to stand for China dumping, Japan dumping … Australia does a lot of aluminium at below cost. I mean, this has got to end, and the president is on it, and he’s protecting America.”

Australian aluminium producers have been shielded from rising energy prices and been promised $2bn by Labor to switch to renewable electricity. But a government spokeswoman said Australia “does not provide subsidies directly to the aluminium sector”, and there had been no complaints about dumped aluminium expressed by US industry.

The government’s push to do a deal with the US on critical minerals follows years of bilateral engagement on the issue aimed at developing supply chains for military, energy and hi-tech industries that are outside China’s control.

Mr Trump this week revealed plans to build critical minerals processing facilities on Defence Department land after telling Congress last week he would “take historic action to dramatically expand production of critical minerals and rare earths here in the USA”.

US President Donald Trump meets with Irish Prime Minister Micheal Martin in the Oval Office of the White House in Washington on Wednesday local time. Picture: AFP

The US designates 50 minerals as critical to the US economy and national security, 30 of which Australia has significant quantities.

Scott Morrison’s former chief of staff John Kunkel, who is now senior economics adviser at the United States Studies Centre, said Australia didn’t have many negotiating cards to play, so it made sense to try to lever off the nation’s critical minerals resources.

“I would say Kevin Rudd has probably been thinking about lots of new and specific things in this context,” he said.

“Under Biden, there was quite a developed process right up until the end where they were basically trying to put together a Western Club on critical minerals as part of a strategy to reduce Chinese dominance in the marketplace.

“We want to be as co-operative as possible, and that’s the context of why the critical minerals thing has become notable.”

Arafura Rare Earths managing director Darryl Cuzzubbo said Australia’s critical minerals resources put the nation in a strong bargaining position to secure a quid pro quo on tariffs.

“Outside of China, which controls nearly 90 per cent of supply, the only country that has an independent source of rare earths is Japan through Lynas (Australian company Lynas Rare Earths). So if you are the US, Europe or Korea, you are currently very exposed.

“Australian rare earths have to be of significance in this environment because the vast majority of rare earth projects in other countries are either years away from entering construction or depend upon processing in China.”

The Albanese government ruled out retaliatory tariffs against the US but Canada and the EU hit back on Thursday. Announcing new tariffs on $33bn worth of US goods, Canadian Finance Minister Dominic LeBlanc said his country would “not stand idly by while our iconic steel and aluminium industries are being unfairly targeted”.

The EU slapped tariffs on about $45bn worth of US imports including textiles, bourbon, jeans, peanut butter, and Harley Davidson motorcycles.

US Commerce Secretary Howard Lutnick. Picture: AFP

Westpac chief executive Anthony Miller said Australian exporters should focus on Asia-Pacific markets rather than being preoccupied with the US.

Mr Miller told the International Institute of Finance in Sydney that Australia needed to show the region it was a “consistent, reliable, and transparent” trading partner. He said agriculture and education were two key sectors where Australia could better engage with Asia.

Australia’s richest man Anthony Pratt is also set to argue for greater market diversification at The Australian’s Global Food Forum in Melbourne on Friday.

“We are diversifying into new international markets with 70 per cent of our farmed production being sold to 169 markets,” Mr Pratt will tell the forum, according to an advance copy of his speech.

“Free trade agreements or FTAs have been a critical part of our export success – they are the oil in the cogs of the engine of international trade.”

Meanwhile, Democratic co-chair of the Congressional AUKUS Working Group, Joe Courtney, lashed out at Mr Trump’s denial of a steel and aluminium tariff exemption for Australia.

“The US & Australia have enjoyed free trade for 20 years because it’s in America’s best interests. Indeed, today the US has a TRADE SURPLUS with Australia!” Mr Courtney posted on X.

“A month ago, under AUKUS, Australia delivered a $500M check to the US Navy, with $2.5B more on the way. And an Australian steel company has created 5,000 AMERICAN JOBS in 16 states. The Trump tariffs that went into effect today are a senseless slap in the face.”

Additional reporting: Brad Thompson