Analysis-US-Australia rare earths deal is a start but won't shake China dominance any time soon

Core Insights - Donald Trump's support for Australia's critical minerals industry is expected to provide significant financial backing, but experts believe that shifting the supply chain away from China will take longer than anticipated [1][2]. Group 1: Financial Commitments - The U.S. and Australia have signed an agreement committing a total of $3 billion to mining and processing projects, along with establishing a price floor for critical minerals [2]. - U.S. investments are projected to unlock critical mineral deposits valued at $53 billion in Australia [2]. Group 2: Market Dynamics - Trump claimed that within a year, there would be an abundance of critical minerals and rare earths, suggesting they would be worth about $2 each [3]. - Industry experts expressed skepticism regarding the feasibility of Trump's timeline, indicating that significant supply growth may not occur until 5-7 years from now [4]. Group 3: China's Market Dominance - China currently dominates the global rare earths market, accounting for 90% of refining capacity and 69% of mining [5]. - Recent export curbs by China have raised concerns among U.S. and Western allies, prompting a push to reduce reliance on Chinese supplies [6]. Group 4: Price Trends - Benchmark prices for processed rare earths, specifically NdPr oxide, surged by 40% to $88 per kilogram in August, following a period of weakness [6]. - Prices have since decreased to $71, leading Western developers to advocate for government support to establish a higher price floor for production viability [7].