U.S. President Donald Trump and Australian Prime Minister Anthony Albanize signed a critical minerals cooperation agreement on October 20 that includes projects worth up to $8.5 billion, CNBC reported. The recoverable resources under these projects are estimated at about $53 billion, the White House said. Over the next six months, the two states will each allocate $1 billion to projects that are ready to launch now, Albanize told reporters following his meeting with Trump. This includes the fact that the U.S. will invest in the processing of rare earth elements in Australia.

The White House later issued a fact sheet saying the two countries will invest more than $3 billion within six months. Also, according to the announcement, the U.S. Export-Import Bank (Ex-Im Bank) is willing to consider providing financing for seven projects worth more than $2.2 billion, which could unlock up to $5 billion in combined investment.

All this is intended to lead to the growth of mining and processing capacity outside China, which still holds a monopoly on rare earth elements and high-tech magnets made from them, recalls Barron's. At the same time, Australia is home to the world's largest processing plant outside of China, the publication notes.

How did the stock react

- In trading on Monday, October 20, shares of MP Materials, the largest rare earth metals producer in the Western Hemisphere, rose 3.5%.

- Quotes of another American player USA Rare Earth jumped by 13.8%. They were additionally influenced by a "buy" recommendation from William Blair analyst Neil Dingman, who began tracking these securities on Monday, Barron's reports . He believes the U.S. government has yet to finalize its investments in domestic rare earth companies, and USA Rare Earth is one of the few fully integrated companies in the rare earth industry. The analyst expects the combination of these factors to provide long-term returns for shareholders.

- Shares of aluminum giant Alcoa, which will be among the participants in joint projects between the two countries, added 8.5%.

- United States Antimony, which mines, processes and sells antimony and related metals, including gold and silver, in the U.S. and Mexico, climbed 18%.

- Quotes of the Australian company for the extraction of rare earth metals Lynas Rare Earth, traded on the over-the-counter market in the United States, soared by 16%.

Context

Investors are waiting for a possible meeting between Trump and Chinese President Xi Jinping on the sidelines of the APEC summit later this month. Strategists believe that Beijing's threats to limit exports of rare earth metals - key for high-tech products - could be a tactic ahead of these talks, Barron's writes. On Sunday, the U.S. leader called these minerals a U.S. priority in relations with China.

Regardless of the outcome of trade negotiations between the two countries, investors expect the business of American producers of rare earth elements to grow, according to the publication. Canaccord analyst George Gianarikas estimates total U.S. demand for magnets made of these metals at about 50,000 tons per year. MP Materials plans to produce 10 thousand tons annually by the end of the decade - thus, there remains a significant market volume for non-Chinese companies.

According to Raymond James analysts quoted by Barron's, a new wave of federal support for the industry may soon follow. "Congress is actively debating additional funding and material support measures. Last week's volatility has only heightened the focus and urgency of this issue," said analyst Ellen Ehrnrooth. - The White House is clearly determined to act, seeking to work with other countries to create alternatives to China."




This article was AI-translated and verified by a human editor

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