China controls the rare earths the world buys - can Trump's new deals change that?

US chairperson Donald ruff has signed a snow flurry of deals on his Asia see to secure the supply of rare earths, a critical sector that China has long dominated.

The deals with Japan, Malaysia, Thailand, Vietnam and Cambodia differ in size and substance and it's too early to assess their tangible impact. But they all include efforts to diversify access to the minerals that have become essential for advanced manufacturing, from electric vehicles to smartphones.

The agreements, which aim to lock partners into trading with the US, are a clear bid to reduce dependence on China, ahead of a key meeting with its leader Xi Jinping.

They could eventually challenge Beijing's stranglehold over rare earths, but experts say it will be a costly process that will take years.

"Building new mines, refining facilities, and processing plants in regions such as Australia, the United States, and Europe comes with much higher capital costs, stricter environmental regulations, and more expensive labour and energy inputs [compared to China]," Patrick Schroder, senior research fellow at the Environment and Society Centre at Chatham House wrote in an editorial this week.

It's not clear yet if the $550bn US investment Japan had previously agreed to will be part of the rare earths deal. US Commerce Secretary Howard Lutnick is expected to flesh out those details with Japanese companies during his upcoming visit.

But it's a turning point step in the US-China rivalry.

Beijing controls the processing of almost all the world's rare earths, which has given Xi powerful leverage in the ongoing trade war with Washington. Chinese export controls have choked supply of rare earths recently as the two countries try to nail down a deal spanning a range of issues, from tariffs to the sale of TikTok's US operations.

The controls have also raised familiar concerns across manufacturing hubs in the US, Europe and Asia – a reminder of how vulnerable global supply chains are to the rocky US-China relationship.

Before Trump even travelled to Asia this week, he clinched an $8.5bn deal with Australia, promising industrial co-operation and joint investment to build processing capacity for rare earths outside China.

Speaking at the time, during Australian Prime Minister Anthony Albanese's visit to the White House, Trump said that "in about a year from now we'll have so much critical minerals and rare earths that you won't know what to do with them", adding that "they'll be worth $2" – the suggestion being that prices would plummet as supply soared.

Both the timeline and the price are unlikely, but Australia is certainly an important partner in the US quest for critical minerals.

"The country is a periodic table that lights up like a Christmas tree boasting one of the broadest and richest concentrations of mineral resources on Earth," Gracelin Baskaran and Kessarin Horvath of the Centre for Strategic and International Studies wrote in a recent essay.

Several companies are already building refineries, including Iluka Resources, which told the BBC earlier this year that it would be financially near impossible without government support.

The critical minerals deal with Japan involves the two sides agreeing to boost the supply and production of rare earths – and includes plans for co-ordinated investment and stockpiling of rare earths as well as a Rapid Response Group to manage supply shocks.

The deals with the smaller South East Asian economies are just as thin on details. Malaysia, Thailand, Vietnam and Cambodia all agreed to increase US access to rare earths and export rules that would favour American buyers over Chinese companies. They also include promises that they will not block shipments to the US, and would encourage local processing and investment by non-Chinese firms.

But the deals with Malaysia and Thailand are non-binding agreements, or what we call a "Memorandum of Understanding" (MOU). Will they survive political shifts in these countries?

Another big question that has not been addressed is regulation – especially given potential environmental damage. With rare earths, it's not just mining but even the processing that is a dirty business. It involves extraction, leaching, thermal cracking and refining, all of which produce radioactive components. The impact in China has been well-documented, which has meant that it's not an industry other countries have readily embraced.

The world's largest supplier of rare earths outside China is the Australian company Lynas Rare Earths. It relies on Malaysia for part of its refining but has faced a number of regulatory hurdles there over the years.

By binding regional heavyweights like Japan and Australia into investment deals which potentially give the US more control over rare earths supplies, Trump will enter into the high-stakes Thursday talks with Xi on firm ground.

But the fact is China still controls around 70% of rare earth processing. And catching up requires immense amounts of capital, strong environmental laws and technical expertise. Building a single processing plant can take years from design to full production. Australia has been serious about ramping up production of rare earths for a long time now, but its plants are still not up and running.

And China is hardly a silent observer in this region – trade with the world's second-biggest economy is essential for all these countries, including Japan. So Washington cannot discount the influence Beijing wields, especially in South East Asia.

Supply chains governing rare earths need to diversify and transform. Commitments to co-operate and invest are a start, but the road ahead is long and complicated.

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