The United States has pledged up to $850 million in funding to support two Australian-listed rare earths projects, signaling a strategic move by Western nations to establish a robust supply chain for these critical metals essential in industries ranging from renewable energy to defense.
Australian Strategic Materials (ASM.AX) disclosed receiving a Letter of Interest (LoI) from the U.S. Export-Import Bank (EXIM) for a debt funding package of up to $600 million to facilitate the development of its Dubbo rare earths project near Sydney. Additionally, EXIM has extended preliminary support of up to $250 million to Australian-listed Meteoric Resources (MEI.AX) for its Caldeira rare earths project in Brazil.
Shares in ASM surged significantly following the announcement, reflecting investor confidence in the projects’ potential. The U.S. government’s financial backing underscores the strategic importance of securing a domestic supply chain for critical minerals, with a focus on sourcing raw materials from allied nations.
The funding support from EXIM is instrumental in attracting commercial lenders and private investors to the rare earths sector, especially given the recent price fluctuations and complex production requirements. ASM aims to finalize its investment decision on the Dubbo project by the end of the year, focusing on producing light and heavy rare earths oxides.
Meteoric Resources is targeting a late 2023 investment decision for the Caldeira project, which will focus on producing light rare earths neodymium and praseodymium, along with heavy rare earths dysprosium and terbium. The U.S. government’s involvement underscores a commitment to advancing critical minerals projects with strong potential.
The U.S. has demonstrated support for rare earths projects globally, including Australia’s Lynas Rare Earths, as part of efforts to diversify supply chains away from China, a dominant player in the global rare earths market. The collaboration between the U.S. and Australia reflects a strategic alliance aimed at enhancing mineral processing capabilities and reducing reliance on Chinese supply dominance.
ASM’s agreement with Noveon Magnetics Inc. for neodymium iron boron alloy supply further highlights the growing partnerships within the rare earths sector, emphasizing the importance of securing diversified sources for critical minerals.
Australia’s recent commitment to invest in a rare earths mine and refinery in the Northern Territory further underscores the nation’s strategic focus on bolstering its critical minerals industry and fostering international partnerships for sustainable mineral supply chains.