The $13bn critical minerals deal between the US and Australia is just the start for rare earths companies

• Australian rare earths companies enjoyed big gains after Donald Trump and Anthony Albanese announced a US$8.5bn critical minerals deal
• Rare earths, magnesium and gallium projects enjoy support from US and Aussie governments in bid to combat China’s supply chain supremacy
• Juniors line up to show their projects are worth Washington’s backing

Aussie critical minerals stocks are, to steal a line from Humphrey Bogart, seeing the beginning of a beautiful friendship with the US Government.

The sector, led by rare earths juniors, rallied as expected after Aussie PM Anthony Albanese’s Oval Office love-in with Donald Trump resulted in a re-commitment to the AUKUS submarine deal and an agreement to pump US$8.5bn (+A$13bn) into funding critical minerals supplies out of Australia.

Its aim is to build a conveyor belt from Australia out to the US, with each committing at least US$1bn of investments as part of the agreement in a bid to wrestle control of rare earths pricing and supply from China.

The criticality of the deal has been ratcheted up since April, when China slapped export restrictions on seven heavy rare earth products that have choked supplies for Western manufacturers of cars, electronics and defence technology.

Further restrictions this month, part of a long-running trade dispute between Xi’s China and the tariff-happy US President, underlined the threat facing the US as it looks to ween itself of reliance on a fractured relationship.

The headline stealer came from Arafura Rare Earths (ASX:ARU), the Gina Rinehart-backed owner of the Nolans rare earth mine to oxide development in the Northern Territory. It already boasted upwards of $1bn in funding commitments from sovereign export banks and other Canberra funds.

You can add to that now as much as US$300m from the US Export-Import Bank, announced at an official ceremony in DC, as well as conditional approval for up to US$100m in funding from Export Finance Australia.

On top of that, Alcoa and Sojitz will receive US$200m in equity finance from the Australian Government along with a US Government equity and offtake commitment for a 100tpa gallium plant at Wagerup in WA.

“President Trump and I agreed today we will work very hard together in both our nations’ interests,” Albanese said in an official statement.

“We’ve agreed today Australia and America are going to make more things together with our historic framework on critical minerals.

“Australia is home to much of the periodic table of critical minerals and rare earth metals that are vital for defence and other advanced technologies.

“Cooperation on critical minerals and rare earth supply chains is testament to the trusted partnership between Australia and the United States as strategic defence allies.”

More rare earth winners

That was followed by a cavalcade of announcements on the ASX on Tuesday, with a host of rare earths developers announcing funding talks with EXIM or EFA.

They included Astron (ASX:ATR), which announced a conditional letter of support for its $520m Donald project in Victoria from EFA for $80m in senior debt financing.

The rare earths and mineral sands project is well aligned with the strategic focus of the framework, with US-based uranium and rare earths processor Energy Fuels holding a life of mine offtake for its 7200t of rare earth metals in concentrate per annum.

That includes 1000t of NdPr, and 92t and 16t respectively of high value heavies dysprosium and terbium.

“Today’s announcement underscores the importance of securing diversified supply chains,” Astron CEO Tiger Brown told Stockhead.

“The Donald project, with its advanced status, globally significant resource and established joint venture partnership with Energy Fuels is well placed to provide an alternative supply of feedstock of critical minerals, most notably rare earths, to US and European automakers and strategic industries.”

Also in the good books was fellow Victorian rare earths and minerals sands stock VHM (ASX:VHM).

It announced a letter of support from EFA for up to $75m and letter of interest for up to US$200m (A$304m) from EXIM with an ‘improved’ term of up to 15 years to fund its Goschen project.

“We are delighted to receive this non-binding and conditional Letter of Support from Export Finance Australia,” VHM CEO Andrew King said.

“Together with the EXIM LOI, this represents a significant milestone in our financing strategy and underscores the strategic value of the Goschen Project to both Australian and international stakeholders. We look forward to progressing these partnerships as we advance toward final investment decision.”

In WA, Northern Minerals (ASX:NTU), which owns the heavies-rich Browns Range project, flagged up to US$230m in funding fro EXIM in the form of a letter of intent, prompting Argonaut to place its price target under review.

“Funding of this potential magnitude is expected to benefit our Browns Range valuation,” analyst George Ross said.

Scandium hopeful Sunrise Energy Metals (ASX:SRL) announced EXIM has ‘refreshed’ its LoI for up to US$67m of finance for its Syerston project in NSW, while Latrobe Magnesium (ASX:LMG) also nabbed a letter of interest for up to US$122m (A$200m) for its stage 2 commercial magnesium metal plant in Victoria.

Astron shares closed ~23% higher, with VHM up close to 21%, NTU up slightly having already run 175% YTD, and LMG 15% higher. Sunrise, which also released an updated reserve for Syerston, was down close to 12%.

Sentiment for established players who have already seen big gains turned negative in afternoon trade, with profit-taking hitting Lynas (ASX:LYC) (down 7.5%) and Iluka Resources (ASX:ILU) (down 0.1%).

Not the end

Along with investments in new supplies, the US and Australian governments are seeking to underwrite prices for rare earths, amid concerns China’s dominance and use of a quota system has helped the Middle Kingdom suppress prices to a level that disincentivises overseas competitors.

The Pentagon played its opening gambit with a US$110 per keg price floor for NdPr (the main light rare earths oxide) as part of a deal that saw it take a 15% equity stake in New York listed Californian producer MP Materials, another Rinehart investment.

The most eyebrow-raising comment out of Trump’s mouth was the claim that within a year we’ll have so many rare earths we won’t know what to do with them. They’ll be $2/kg, he claims, very much at odds with the hopes of miners hoping to repay their government loans.

Price has been one hurdle for rare earth developers in recent years. But government support and the promise of offtakes directly with the Australian and US governments could underwrite projects long facing challenging market conditions.

Beyond the key Arafura and Alcoa announcements on Monday night, Canaccord Genuity head of research Reg Spencer said more projects were likely to see support under the framework.

“We see the most critical and relevant part of the framework as being financing support and pricing mechanisms (i.e., price floors),” he said.

“Outside of ARU-ASX and Alcoa-Sojitz, we await the identification of further projects in the running for government support.

“In the meantime, we see projects that produce/plan to produce fully refined rare earths (i.e., Arafura, Iluka Resources [ILU-ASX: A$8.10 | HOLD, A$7.10 target], Lynas Rare Earths [LYC-ASX: A$19.24 | HOLD, A$13.70 target]) fill gaps in the supply chain (i.e., Australian Strategic Materials [ASM-ASX | Not Rated]) and those involved in metals recycling (i.e., IperionX [IPX-ASX: A$7.77 | SPEC BUY, A$8.90 target], Metallium [MTM:ASX | Not Rated]) as among candidates to receive government support.

“Additionally, we also see the planned introduction of price floors as being beneficial for rare earths producers.”

Metallium (ASX:MTM) has the benefit of being located in the US itself and a specific clause in the framework about “committing to investing in minerals recycling technology and to work together to ensure management of critical minerals and rare earth scrap that supports supply chain diversification.”

The $630m company is aiming to use a novel processing technology at a Texas plant to initially produce commercial quantities of gold, silver, copper, tin, antimony and palladium from printed circuit board waste, and add a specialty materials demonstration line to process rare earth tailings, refinery residues, and semiconductor feedstocks gallium and germanium.

“This agreement formalises the very principles Metallium was founded on – allied-nation cooperation, technology-led resource independence, and sustainable processing within the United States,” MD Michael Walshe said in a statement yesterday.

“The framework’s recognition of scrap and recycling as strategic feedstocks validates our model of turning e-waste and tailings into secure, low-emission metal supply. Metallium is proud to represent how Australian investment and US technology can deliver critical-metal independence for America and its allies.”

Other ASX juniors with Australian projects are hopeful of tapping into the new line of government support in the framework.

“The recent dealings with the US should pave the way for the next generation of low-cost low-capex projects like our emerging Sybella deposit just 20km southwest of Mount Isa,” Red Metal (ASX:RDM) managing director Rob Rutherford said.

“The devil will be in the detail, but it seems a clever arrangement by Trump and Albanese in what could be a win-win for both nations.”

Gallium gap

While rare earths is the buzzword, the investment in the Alcoa-Sojitz plant – equivalent to 10% of the global gallium market – is also flowing down to explorers.

There are hopes stranded deposits, many of them locked inside bauxite resources, could be opened up as America looks to sidestep Chinese controls on the metal, a key component of computer chips.

That makes it ground zero in the AI race, an emerging sphere Trump is keen to maintain America’s dominance in.

Nimy Resources (ASX:NIM), which has made a unique schist hosted gallium discovery at its Block 3 prospect in WA’s Wheatbelt, was up a colossal 26% on Tuesday off the back of the news.

Part of the Mons Belt, a greenstone entirely controlled by Nimy, the project hosts an exploration target of 9.6-14.3Mt at 39-78ppm gallium, with higher grades in the schist portion of the exploration target – 1-1.3Mt at 103-153ppm Ga.

Nimy has already launched a non-binding collaboration agreement with US supply chain firm M2i Global to support America’s Department of Defense’s procurement of gallium.

RareX (ASX:REE), up 5% on Tuesday, has struck high-grade gallium at its Cummins Range project, one of two major rare earths developments it’s progressing alongside the Mrima Hill project in Kenya.

And Western Yilgarn (ASX:WYX) rose a hefty 25%, announcing plans to follow up high-grade gallium results identified in drilling at the Ida Holmes Junction project in WA in June.

At Stockhead, we tell it like it is. While Astron, VHM, Red Metal, Metallium, Nimy Resources, RareX and Western Yilgarn are Stockhead advertisers, they did not sponsor this article.