US, Australia to invest $2 billion in critical minerals, advance Alcoa gallium project

SYDNEY (Reuters) -The United States and Australia have extended financial support to several Australian companies as part of a wide-ranging critical minerals agreement signed on Monday with an aim of countering China's hold over the industry. Under the agreement signed by U.S. President Donald Trump and Australian Prime Minister Anthony Albanese, the two countries pledged to invest at least $1 billion each over the next six months in mining and processing projects and to set a price floor for critical minerals, a step long sought by Western miners. The governments would also help advance a plan by U.S. aluminium producer Alcoa to build a gallium plant alongside its alumina refinery in Western Australia that could provide up to 10% of global gallium supply. Gallium, a raw material used in the production of alumina, is a critical mineral essential to technology, especially the semiconductor industry and defence sectors. Australia said in a statement that it would provide up to $200 million in concessional equity financing for the project, which includes offtake rights for the Australian government, while the U.S. would also make an equity investment with offtake rights. Alcoa in August signed a joint development agreement with Japan Australia Gallium Associates (JAGA), a venture between the Japanese government and Sojitz Corp, for the project. The company said that once it finishes feasibility work, a special purpose vehicle owned by the U.S. and Australian governments and Alcoa is expected to enter a joint venture with JAGA to construct the plant, which Alcoa would operate. Separately, the U.S. Export-Import Bank (EXIM) announced it sent seven Letters of Interest (LOIs) totalling more than $2.2 billion to advance U.S.-aligned critical minerals projects in Australia. The LOIs were issued to Arafura Rare Earths, Northern Minerals, Graphinex, Latrobe Magnesium, VHM, RZ Resources and Sunrise Energy Metals. They represent the next phase in securing the minerals that power American manufacturing, national security, and other strategic industries, EXIM said in a statement. Shares of Northern Minerals rose 15%, Latrobe Magnesium jumped 27% and VHM were 29% higher in opening trade in Australia on Tuesday, compared to a broader market gain of 0.4%. (Reporting by Melanie Burton in Sydney; Writing by Praveen Menon; Editing by Jamie Freed)

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