The United States government has earmarked $1.28 billion in support for ASX-listed rare earths companies, aiming to diversify the global supply chain and reduce dependence on China.
The US Export-Import Bank (US EXIM) has issued preliminary "letters of interest" to Meteoric Resources and Australian Strategic Materials Ltd (ASX:ASM, OTC:ASMMF) (ASM), indicating potential future loans at concessional rates.
Cash commitments made
ASM received a non-binding promise of $US600 million to advance a mining project near Dubbo, New South Wales, while Meteoric Resources was offered $US250 million to develop a rare earths project in Brazil.
These commitments are contingent on US firms securing contracts in the respective projects, mirroring past financial arrangements like the US EXIM loan for Gina Rinehart's Roy Hill iron ore venture, which benefited Caterpillar (NYSE:CAT).
These overtures from Washington complement existing efforts by the US and Australian governments to nurture alternative supply lines for critical minerals, traditionally dominated by China.
The US Department of Defence granted Lynas $US258 million to construct a rare earths refinery in Texas, and other Australian firms, such as graphite producer Syrah and lithium developer Liontown, have also received significant US financial backing.
In a parallel move, Export Finance Australia extended a substantial loan to Northern Territory's Arafura Resources, with Iluka Resources securing the largest Australian federal loan for a new refinery in Western Australia.
This influx of government funds is timely for companies like Meteoric and Liontown, especially as the market for lithium and rare earths has recently contracted.
The financial injections from the US not only enhance the market standing of Meteoric and ASM but also validate their projects' unique geological prospects, distinct from those exploited by Australia's leading rare earths producer, Lynas.
Vertical integration
ASM's focus has shifted towards rare earths at its Dubbo site, capitalising on the demand for elements like terbium and neodymium, and is planning to achieve vertical integration through its South Korean metallisation facility.
Resources Minister Madeleine King lauded the international collaboration, highlighting its significance in achieving broader economic and strategic goals.
Meanwhile, Meteoric aims to tap into Brazil's rich ionic clay deposits, diverging from the hard rock mining exemplified by Lynas in Western Australia.
The backing for Meteoric also underscores the influence of critical minerals investor Tolga Kumova, aligning with broader industry trends and strategic partnerships shaping the future of rare earths and critical mineral supply chains globally.