U.S. and Australia Seal $8.5bn Critical Minerals Deal, Sending Australian Miners Soaring.

TradingKey - The United States and Australia reached a strategically significant critical minerals cooperation agreement on Monday, aiming to break China's global dominance in this sector and reduce supply chain risks through substantial financial support for Australian mining companies. The announcement triggered a collective surge in Australian rare earth and critical minerals-related listed company stocks.

Under the agreement, the United States and Australia will each invest $1 billion over the next six months for projects, with additional investments to follow, establishing an $8.5 billion pipeline of critical minerals projects between the two nations.

“In about a year from now, we’ll have so much critical mineral and rare earths that you won’t know what to do with them,” Trump said Monday at the White House during a meeting between the two leaders.

Albanese said the deal represented an $8.5 billion “pipeline that we have ready to go.” He hailed the minerals and rare earths pact as taking the nations’ economic and defense cooperation “to the next level.”

One of the core components of the agreement is massive financing support from the U.S. Export-Import Bank (EXIM). The bank has issued letters of intent (LOI) totaling over $2.2 billion to seven Australian critical minerals companies to advance Australia-based critical minerals projects with U.S. connections.

Companies receiving financing letters of intent include Arafura Rare Earths (ARU.AX), Northern Minerals (NTU.AX), Graphinex, Latrobe Magnesium (LMG.AX), VHM (VHM.AX), RZ Resources, and Sunrise Energy Metals (SRL.AX).

Following the announcement, shares of several companies that received letters of intent surged collectively during early trading, though some gains later moderated. At the time of writing, Arafura Rare Earths' stock price had risen over 5%, while Northern Minerals, Latrobe Magnesium, and VHM Limited shares surged 11%, 15%, and 18% respectively.

Additionally, the agreement explicitly supports Alcoa Corporation's (AA.N) plan to build a gallium plant next to its alumina refinery in Western Australia. Once completed, this gallium plant could potentially supply up to 10% of global gallium supply. Boosted by this positive development, Alcoa Corp.'s stock price in Sydney surged 9.6% at one point.

The agreement was finalized during Albanese's first visit to the U.S. following Trump's return to office, amid heightened geopolitical tensions between China and the West. China's recent export restrictions on critical rare earth elements have raised global supply chain concerns. As the world's fourth-largest rare earth reserves holder, Australia is actively positioning itself as an alternative supplier of critical minerals for semiconductors, defense technology, and renewable energy sectors where China currently dominates.

The deal between the US and Australia “includes the use of economic policy tools and investment to support the supply of raw and processed critical minerals/rare earths, and accelerate the development of diversified, liquid, and fair markets,” Canaccord Genuity Australia Ltd. analysts including Reg Spencer said in a note on Tuesday.