The two countries signed a compact in Hiroshima, Japan, aiming to benefit economies mutually.
U.S. President Joe Biden and Australian Prime Minister Anthony Albanese signed the Climate, Critical Minerals and Clean Energy Transformation Compact on Saturday during a meeting of the Quadrilateral Security Dialogue on the sidelines of the G7 Summit in Hiroshima, Japan. The compact is intended to coordinate policies and investments in the clean energy and critical minerals sectors to accelerate the growth of the respective industries, according to a press release published by the White House. Following partnerships between Australian and American companies such as Arafura supplying General Electric with rare earth elements and Lynas building a rare earths separation plant in Texas, the deal now formalizes the cooperation between the two countries.
Australia supplies around half of the world’s lithium and has vast amounts of other critical minerals like rare earths. China dominates the global market of rare earths, especially in the processing and other downstream production steps. The compact is a step in limiting China’s chokehold on the sector and creating independent supply chains. Critical minerals are essential for the clean energy transition, as they are components of photovoltaic panels and wind turbines, for example. U.S. investments in extraction and processing facilities of these minerals in Australia are one central aspect of the compact. However, the compact also incorporates the production and exportation of clean energy between the two countries. Critical minerals and clean energy imported from Australia are now covered under the Inflation Reduction Act, rendering the Pacific nation’s industry more competitive.
In addition to critical minerals, the compact also promotes investments in clean hydrogen materials and technologies, a second pillar of clean energy production. Just last week, the Albanese government announced investments into 13 domestic resource projects, however, Australia is yet to announce a dedicated critical minerals strategy. The compact could now be a precursor of the country’s opportunities to become a global leader in the sector.
Photo: iStock/Oleksii Liskonih