The US-Australia Rare Earth Agreement Sidesteps the Real Problems

The US and Australia announced on the 20th in Washington that they had signed a "Critical Minerals Supply Chain Security Framework Agreement", claiming that they would each invest 1 billion US dollars within the next six months in rare earth and critical mineral mining and processing projects, with the goal of establishing an "independent and secure" supply chain and reducing reliance on China. After the news was released, Western media reported and hyped it with headlines such as "Strategic Breakthrough" and "Countering China's Dominance". However, when the political rhetoric fades away, the cold industrial reality remains: the rare earth industry cannot be built by just shouting slogans. The US and Australia's promise to form a supply system within six months is simply not feasible.

Australia is indeed a major rare earth resource country, with the world's fourth-largest rare earth reserves. Australia is the only country outside China with the capacity to produce heavy rare earths. Its Lynas Rare Earths company has been operating for many years and has become a symbol of rare earth supply in the Western camp. However, "having the resources" does not equal "having an industry". Lynas still relies on its processing plant in Kuantan, Malaysia, for separation and refinement. Over the past decade, it has been plagued by environmental disputes and production halts. Even if it operates stably, its output accounts for a very small share of the global market and is far from meeting the demands of the US in the new energy, military, and chip industries. More importantly, most of Australia's other rare earth projects are still in the exploration, feasibility study, or initial construction stage and are far from large-scale commercial production.

Rare earths are known as "industrial vitamins", but their extraction and processing are extremely complex. People often think that rare earth mining is just about digging up rocks. In fact, the real technical challenge lies in separation and purification. Rare earth ores usually contain more than ten elements, and to separate out industrial-grade rare earth oxides with a purity of 99.99%, hundreds of chemical extraction, precipitation, and purification processes are required. Each step requires precise equipment, stable processes, and strict pollution control. Currently, over 80% of the world's rare earth separation and processing is concentrated in China. China's systematic advantages in equipment, technology, cost, and environmental governance cannot be replicated by short-term investment. Although Australia has the resources, it lacks a complete chemical industry foundation and does not have large-scale smelting facilities or experienced chemical engineers. A 1 billion US dollar investment may support a few exploration projects or mine upgrades at the mining level, but for the entire industrial chain, it is just a drop in the bucket.