Washington | Donald Trump has triggered rarely-used emergency government powers to allow direct state investments in critical minerals projects on Australian soil as part of a global push to eliminate American industry’s reliance on Chinese suppliers.
In a dramatic move that industry figures likened to Mr Trump “breaking glass in case of emergency”, the President also authorised faster approval and development of US production of raw materials for defence, renewable energy and electric vehicle manufacturing.
Mr Trump signed the executive order en route to a campaign rally in north-eastern Minnesota, where he hopes the so-called “Iron Range” region’s historically Democrat-leaning mining residents will back his re-election on November 3.
“Earlier today I took another historic step for your state when I signed an executive order providing billions of dollars to jump-start production of critical and other minerals which will create countless jobs that are so important for our country,” Mr Trump told supporters at Duluth airport late on Wednesday (Thursday AEST).
Critical minerals comprise a range of metals and elements crucial to high-tech manufacturing in industries such as renewable energy, aerospace, electric vehicles, defence and agri-tech. Global de-coupling of supply chains has highlighted Australia’s importance as an alternative to China as a source country for many of the minerals.
China maintains control of about 80 per cent of the rare-earth compounds and metals imported by the US last year.
Critical minerals and rare earth magnets are vital for everything from Elon Musk’s electric vehicles to the fan blades of F-35 fighter jets, as well as wind turbines and rocket guidance systems.
In essence a supranational resources-focused initiative with shades of some of China’s Belt and Road programs, the executive order enables the US Department of Interior to use its powers under the Defence Production Act to “fund mineral processing that protects our national security”.
Critically for Australia’s resources sector, the order authorises the US government to “build resilient critical mineral supply chains, including through initiatives to help allies build reliable critical mineral supply chains within their own territories”.
“The President will continue to protect our domestic supply chains for critical minerals from predatory Chinese action,” the White House said in a statement.
The order significantly expands on the critical minerals partnership signed between the Trump administration and the Morrison government in November last year.
The US military has already awarded Australia’s rare earth champion Lynas Corporation one of only two contracts to develop a processing facility in Texas. News of the Trump initaitive helped Lynas shares climb more than 5 per cent on Thursday.
Fast-tracking project approvals in the US under the President’s emergency order is another potential boon for Australian companies already operating here, such as Rio Tinto, the biggest exploration spender in the US.
“To the extent that it makes permitting of exploration projects easier, it will allow Australian firms with expertise to explore for the lithium or the copper that will be needed in the renewable energy conversion,” said a senior executive at the Australian mining giant.
While Australia would be among beneficiaries of Mr Trump’s order, other allies such as Canada and Greenland could also benefit. Mr Trump last month announced a $US12 million ($16.7 million) aid package for economic development in Greenland – a year after he seemingly joked that his administration was looking at buying the oil- and mineral- rich island increasingly being wooed by China.
Mr Trump’s executive order, issued under the 1977 International Emergency Economic Powers Act, addresses geopolitical concerns while pitching to a domestic audience.
The White House said Mr Trump’s order would “support mining jobs, alleviate unnecessary permitting delays, and reduce our nation’s dependence on China for critical minerals”.
“Whereas the United States recognises the continued importance of cooperation on supply chain issues with international partners and allies, in many cases the aggressive economic practices of certain non-market foreign producers of critical minerals have destroyed vital mining and manufacturing jobs in the United States,” the White House said.
In an echo of the outsized role Queensland’s mine-related electorates played in Scott Morrison’s election victory last year, resource-heavy Minnesota is among a number of battleground states Mr Trump’s campaign hopes to wrestle from Democrats.
Hillary Clinton won the state by a narrow 1.5 per cent margin, or about 44,000 votes, four years ago.
Outside of the state’s largest city, Minneapolis, and its “twin city” neighbour St Paul – where Democratic support is at its strongest – the rest of Minnesota voted almost entirely for Mr Trump in 2016, with the exception of a handful of counties in the north-east centred around the mining town of Duluth.
But those counties are now seen leaning towards Mr Trump. Sometimes known as the “Duluth Complex”, the region is home to one of the largest undeveloped mineral deposits on earth.
It holds an estimated 4 billion tonnes of copper, making it the world’s second-largest deposit, as well as the third-largest nickel deposit, according to Mining Minnesota, an industry advocacy group whose members include Brisbane-based Dyno Nobel.
A group of Democratic mayors from the state’s Iron Range backed Mr Trump at last month’s Republican National Convention.
“The radical environmental movement has dragged the Democratic Party so far to the left they can no longer claim to be advocates of the working man,” Robert Vlaisavljevich, mayor of the town of Eveleth, told the convention.
Mr Trump may also be attracting growing support from labour unions in the region, with the international vice-president of the United Mine Workers of America District 2 telling Politico that many of his members were moving away from Joe Biden.
The US election Brief is your guide to the 2020 race.
A bonus newsletter for subscribers. Sign up to receive The Brief once a week in your inbox.