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US and Australia invest $2 billion to advance Alcoa Gallium Project

US and Australia invest $2 billion to advance Alcoa Gallium Project

As part of an extensive critical minerals agreement, signed on Monday to counter China's control over the industry, the United States and Australia extended financial assistance to several Australian firms.

The agreement between U.S. president Donald Trump and Australian prime minister Anthony Albanese commits the two countries to investing at least $1 billion in each of the next six month's mining and processing projects, and to setting a floor price for essential minerals. This is a move that Western miners have long fought for. The governments will also support a plan announced by U.S. Aluminum producer Alcoa, to build a galium plant in Western Australia alongside its alumina refining facility.

Alcoa signed a joint agreement in August with Japan Australia Gallium Associates, a venture between Sojitz Corp and the Japanese government.

Alcoa said that after it completes its feasibility study, a vehicle owned jointly by the U.S., Australian and Alcoa governments will enter into a joint venture to build the plant.

Parties would contribute capital to a special purpose vehicle, and in return receive gallium at a rate proportional to their interest. Alcoa stated that the plant was expected to produce 100 tons of gallium per year.

Alumina is made from gallium, which is an essential mineral for technology. This includes the semiconductor and defense industries.

Reg Spencer, Canaccord's mining analyst, said that the move could be a positive one for Australia-listed companies.

The Export-Import Bank of the United States announced that it had sent seven letters of interest (LOIs), totaling over $2.2 billion, to advance U.S.-aligned vital minerals projects in Australia.

The LOIs have been issued to Arafura Rare Earths and Northern Minerals. These LOIs represent the next step in the process of securing minerals that are vital to American manufacturing, national defense, and other strategic industries. (Reporting from AnshumanTripathy in Bengaluru, and Melanie Burton in Sydney. Writing by PraveenMenon; Editing Jamie Freed).

(source: Reuters)