Australia's critical minerals will be a key topic during discussions between Prime Minister Anthony Albanese and President Donald Trump next week, according to Treasurer Jim Chalmers. Speaking from Washington, Chalmers emphasized that Australia is well-positioned to be a reliable supplier of these valuable commodities as the U.S. seeks alternatives to China, which currently dominates the market.

"We know that American companies desperately need critical minerals, and Australia is very well placed to service that need," Chalmers stated. He added that the issue would be a significant part of both his discussions and those of Prime Minister Albanese with President Trump.

Australia possesses a wealth of critical minerals, which have been identified as a potential bargaining chip in U.S.-Australia relations. Trade Minister Don Farrell noted that his U.S. counterpart had previously raised the topic, suggesting that a deal could involve U.S. investment to support Australian mining operations in exchange for guaranteed access to the extracted minerals.

The urgency of this matter has increased recently due to China's threats to leverage its dominance over critical minerals, which are essential for renewable technologies and military applications. U.S. Treasury Secretary Scott Bessent described China's actions as "an exercise in economic coercion on every country in the world" and indicated a need for a coordinated response among allies, including Australia.

Chalmers reiterated that Australia’s interests are best served through increased trade rather than trade barriers. He expressed concern that the current market for critical minerals lacks reliability and robustness in its supply chains. "Australia's got a lot to offer to the world," he said.

To bolster its domestic industry, the Australian government is considering subsidies for critical minerals production and sales. This initiative aims to instill confidence in potential mining investors. The government already provides various tax credits and financial support under its Future Made in Australia program, which focuses on green applications for these metals. Additionally, it has committed $1.2 billion to establish a strategic reserve of critical minerals, which is still in the planning stages.

As the U.S.-China trade war intensifies, Australian companies are actively pursuing agreements to supply rare earths to the U.S. While this may involve creating a physical stockpile, it is more likely to include assurances that miners will receive a minimum price for their products. This arrangement would allow miners to enter into future purchase agreements with buyers, backed by government guarantees to cover any price shortfalls.

The government's involvement could take the form of financial derivatives, which would ensure miners receive a minimum price while allowing the government to profit if market prices exceed expectations. This price security is intended to facilitate profitable deals between Australian miners and foreign buyers, with the U.S. potentially investing in mining operations in exchange for preferential access to the output.

Similar discussions are also taking place with Japan, South Korea, and European nations. As China threatens to tighten its grip on the export and refinement of critical minerals, the U.S. government has begun stockpiling these resources, particularly those with defense applications. While the U.S. has various options for sourcing minerals, including Canada and South America, Australia's reserves have gained attention as a strategic asset, especially in light of potential exemptions from tariffs imposed by the Trump administration.