U.S. Moves to Invest in Australian Critical Minerals to Counter China’s Dominance

The U.S. government is offering to buy equity in Australian critical minerals companies as part of a major funding initiative aimed at diversifying supply chains and reducing reliance on China. This move comes after China restricted exports of rare earths and permanent magnets, key materials used in electric vehicles, clean energy, and defense technologies, following U.S. tariffs. The restrictions disrupted production for U.S. and European automakers, intensifying the push for alternative sources.

Executives from an Australian delegation of 15 critical minerals companies, including International Graphite and Cobalt Blue, recently met senior U.S. officials in Washington and New York. Among them were David Copley, who leads supply chain initiatives at the U.S. National Security Council, and Joshua Kroon from the International Trade Administration. Discussions centered on funding mechanisms such as traditional debt, debt-equity models with incentives, and potential offtake agreements, where the U.S. could prepay for supply to bolster defense stockpiles.

Andrew Worland, CEO of International Graphite, emphasized that the U.S. government is encouraging proposals and willing to explore multiple financing pathways to accelerate projects by 2027. Andrew Tong, CEO of Cobalt Blue, confirmed that the U.S. is committed to integrating Australian cobalt projects into its supply chain, providing a boost for projects struggling with volatile markets and investor hesitancy.

This initiative aligns with the U.S. government’s recent equity stakes in Lithium Americas and its Thacker Pass lithium mine joint venture with General Motors. The Department of Energy secured these positions through no-cost warrants, reinforcing U.S. national security priorities in critical minerals.

Australia, in parallel, plans to offer shares in its new strategic reserve of critical minerals to allies such as the U.S. and U.K. The reserve is expected to strengthen bargaining power ahead of Prime Minister Anthony Albanese’s meeting with President Trump on October 20, where AUKUS defense and supply chain cooperation will be central.

By leveraging equity investments and long-term supply agreements, Washington aims to derisk critical minerals projects and accelerate global supply chain realignment away from China.