What does the Aussie-US pact on critical minerals mean?

·2-min read


* The Australia-United States Climate, Critical Minerals, and Clean Energy Transformation Compact is intended to accelerate investment, here and across the Indo-Pacific

* The compact commits Australia and the US to support shared climate goals by integrating the two country's industrial bases

* The pact signed last weekend positions Australia as a "partner of choice" in the battery mineral supply chain and technology investment

* It strengthens Australia's connection to the world's biggest economy, which is being turbocharged by new investment through new laws

* A new ministerial-level Taskforce on Critical Minerals will work with industry on "reliable, responsible and secure" access to critical minerals

* Global supply will be strengthened, countering China's stranglehold, through the development of a shared energy industrial base


* As a free-trade agreement partner, Australia is afforded some special treatment under the US Inflation Reduction Act passed last year

* Under the laws, US firms are incentivised through tax credits to source critical minerals from Australia for use in electric vehicles

* The pact will encourage collaboration between the two countries on key standards, financing and regulatory alignment

* To ease future investment, the pact also allows Australia to advocate for Australian business in the development of regulations

* Collaboration on how emissions are counted between Australia and the US will help create an international market for clean products

* Importantly, special status under American laws does not give the US government any authority to direct Australian industry


* Already leading in lithium, Australia has a better chance to quickly develop hydrogen and its derivatives and green metals including steel and aluminium

* President Joe Biden will ask the US Congress to add Australia as a "domestic source" under the US Defense Production Act

* That designation would make Australia only the second country after Canada to be considered for that special status

* It would enable US industry to increase production and investment in Australia, including critical minerals and defence technologies

* This could also expand opportunities for Australian industry in the US, including the ability to apply for US funding

(Source: Department of Prime Minister and Cabinet)