US-Aussie critical minerals pact signals ‘crescendo’ in tackling China – fDi Intelligence

Report on the US-Australia Critical Minerals Agreement and Alignment with Sustainable Development Goals

Introduction: Fostering Global Partnerships (SDG 17)

A multi-billion-dollar framework agreement between the United States and Australia has been established to develop a resilient critical minerals supply chain. This initiative is identified by industry leaders as a pivotal moment in global efforts to diversify the market away from the dominance of single producers. The agreement exemplifies a strategic international partnership, directly contributing to Sustainable Development Goal 17 (Partnerships for the Goals) by fostering government-to-government and public-private collaboration to achieve shared objectives in economic stability and sustainable development.

Strategic Objectives and Economic Impact

Enhancing Industry, Innovation, and Infrastructure (SDG 9)

The agreement’s structure is designed to build resilient infrastructure and foster innovation, which are core tenets of SDG 9 (Industry, Innovation, and Infrastructure). The primary mechanisms for achieving this include:

• Direct government equity stakes in private sector projects.
• Government-led offtake agreements to guarantee demand.
• A joint financial commitment of at least $1 billion from each nation to support a project pipeline valued at approximately $8.5 billion.

An initial recipient of this support is Alcoa’s Gallium Recovery Project in Western Australia, which will receive an equity investment from the US government, signaling a new era of public investment to secure industrial capacity.

Promoting Decent Work and Economic Growth (SDG 8)

By de-risking and accelerating the development of new mining and processing projects, the partnership is poised to stimulate economic activity and create skilled employment opportunities in both nations. This aligns with SDG 8 (Decent Work and Economic Growth). Industry leaders have voiced strong support for a combined approach of government equity and debt, viewing it as the most advantageous model to fund the capital-intensive projects required to build a secure and diversified supply chain.

Advancing Sustainable Production and Climate Action

Securing Resources for Responsible Production (SDG 12)

The strategic imperative to build alternative supply chains is intrinsically linked to SDG 12 (Responsible Consumption and Production). By diversifying the sources of critical minerals, nations can ensure greater transparency and promote more sustainable and ethical production patterns. Corporate strategies, such as the “mines-to-metal” approach being developed by Australian Strategic Materials (ASM), reflect this goal. Key components of this strategy include:

1. Developing integrated rare earth mining and processing facilities in Australia.
2. Operating advanced metallisation plants in allied nations such as South Korea.
3. Planning for the construction of new processing facilities in the United States, with ASM actively seeking funding and shortlisting potential locations.

Supporting the Global Transition to Clean Energy (SDG 13)

Critical minerals and rare earths are indispensable components for clean energy technologies, including electric vehicles and wind turbines. Securing a stable and reliable supply of these materials is therefore fundamental to achieving global climate targets. This agreement directly supports SDG 13 (Climate Action) by ensuring the foundational resources for the green energy transition are accessible and not subject to geopolitical supply shocks.

International Collaboration and Future Outlook

A Global Trend Towards Sustainable Partnerships (SDG 17)

The US-Australia agreement is part of a broader international trend of collaboration aimed at securing critical supply chains. This “crescendo” of cooperation further reinforces the principles of SDG 17 and includes several other key developments:

• The opening of Europe’s first rare earth magnet plant in Estonia by a Canadian group, using Australian and Korean materials.
• A separate agreement between the US and Japan to secure a bilateral rare earth supply chain.
• Consideration by the Australian government to implement price floors through its Critical Minerals Strategic Reserve to support local producers.

This heightened level of government-to-government alignment is considered essential for enabling the private sector cooperation required to build a robust, sustainable, and diversified global critical minerals industry.

1. Which SDGs are addressed or connected to the issues highlighted in the article?

The article addresses several Sustainable Development Goals (SDGs) through its discussion of international cooperation, investment in industry, and the development of new supply chains for critical minerals.

• SDG 8: Decent Work and Economic Growth: The article highlights significant financial investments and the development of new industrial projects, which are fundamental drivers of economic growth and job creation in the high-value critical minerals sector.
• SDG 9: Industry, Innovation, and Infrastructure: The core theme of the article is building resilient infrastructure and fostering industrial development. It details efforts to create new supply chains, processing facilities, and metallization plants, all of which fall under this goal.
• SDG 12: Responsible Consumption and Production: By focusing on diversifying the source of critical minerals away from a single dominant supplier, the article touches upon the sustainable management of natural resources and the creation of more secure and potentially transparent supply chains.
• SDG 17: Partnerships for the Goals: This is a central theme, as the article is based on a bilateral agreement between the US and Australia. It emphasizes government-to-government and public-private partnerships as the primary mechanism for achieving supply chain security and industrial development.

2. What specific targets under those SDGs can be identified based on the article’s content?

Based on the article’s focus on industrial development, financial mobilization, and international cooperation, the following specific SDG targets can be identified:

1. SDG 8: Decent Work and Economic Growth

   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article’s focus on building a new, high-tech “mines-to-metal” supply chain for critical minerals directly supports economic diversification and technological upgrading in both the US and Australia.

2. SDG 9: Industry, Innovation, and Infrastructure

   • Target 9.2: Promote inclusive and sustainable industrialization. The article explicitly discusses the creation of new industrial facilities, such as “Arafura’s separation plant in the Northern Territory” and ASM’s plan to build a “metallisation plant” in the US, which directly contributes to industrialization.
   • Target 9.3: Increase the access of small-scale industrial and other enterprises… to financial services. The framework agreement’s provision for government equity and debt support for private companies like ASM is a direct application of this target, aiming to de-risk and fund essential industrial projects.

3. SDG 12: Responsible Consumption and Production

   • Target 12.2: By 2030, achieve the sustainable management and efficient use of natural resources. The initiative to build a secure supply chain for critical minerals, including projects like “Alcoa’s Gallium Recovery Project,” points towards a more strategic and efficient management of these essential natural resources.

4. SDG 17: Partnerships for the Goals

   • Target 17.16: Enhance the Global Partnership for Sustainable Development. The “US-Australia critical minerals agreement” is a clear example of a bilateral partnership aimed at achieving a shared economic and strategic goal. The article also mentions a similar agreement between the US and Japan.
   • Target 17.17: Encourage and promote effective public, public-private… partnerships. The entire strategy described in the article is built on this model. Governments (public) are providing equity and debt to private companies to build the necessary infrastructure, as seen in the support for Alcoa, Arafura, and potentially ASM.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

The article provides several quantitative and qualitative indicators that can be used to measure progress towards the identified targets.

1. For SDG 9 (Industry, Innovation, and Infrastructure) and SDG 17 (Partnerships)

   • Indicator (Mentioned): Total value of financial support mobilized. The article states that “Canberra and Washington will each provide at least $1bn worth of financial support towards an $8.5bn pipeline of projects.” This is a direct quantitative measure of the financial resources mobilized through the partnership.
   • Indicator (Mentioned): Form of financial support. The article specifies that government support comes in the form of “a combination of equity and debt,” which is a qualitative indicator of the type of public-private partnership being implemented.
   • Indicator (Implied): Number of new industrial facilities established. Progress can be measured by tracking the development and opening of new plants mentioned, such as “Alcoa’s Gallium Recovery Project,” “Arafura’s separation plant,” and ASM’s proposed “metallisation facility” in the US.

2. For SDG 17 (Partnerships for the Goals)

   • Indicator (Mentioned): Number of international agreements. The article explicitly mentions the “US-Australia critical minerals agreement” and a separate “agreement with Japan’s new government to secure a rare earth supply chain,” which serve as indicators of growing international cooperation.

3. For SDG 8 (Decent Work and Economic Growth) and SDG 12 (Responsible Consumption and Production)

   • Indicator (Implied): Diversification of supply chains. A key goal is to counter China’s dominance. Progress could be measured by the percentage of critical minerals sourced from the new US-Australia supply chain versus traditional sources over time.

4. Table of SDGs, Targets, and Indicators

Source: fdiintelligence.com