Shares in Australian rare earths companies have notched up precipitous falls on Friday, despite reports that Prime Minister Anthony Albanese could be poised to strike a major deal with US President Donald Trump within days.
Citing unnamed sources, The Australian on Friday reported that the Trump administration was considering buying into Australian rare earths projects to shore up supplies of the critical minerals, ahead of a meeting between the Australian and US leaders next week.
Mr Albanese announced in April this year that it would establish a Critical Minerals Strategic Reserve, saying the nation was "uniquely placed to meet the needs of increasing global and domestic demand''.
The reserve would seek to set up national offtake agreements, buying agreed volumes of critical minerals from commercial projects or holding options over them, and would also selectively stockpile resources.
How the strategic reserve would seek to stockpile and promote the production of rare earths in particular remains to be seen, with Australia having significant rare earths deposits, albeit few, which are in production and no significant rare earths refining capacity to speak of.
The report in The Australian suggested that equity investments could come from US agencies such as the Pentagon and the Export-Import Bank of the United States.
Trade tensions mount
The importance of the supply of rare earths has been thrown into sharp relief recently, with China increasing the number of rare earths that are under export restrictions by five, with 12 of the 17 rare earth elements now facing export controls.
China produces about 90% of the world's refined rare earths elements, which are critical for use in defence and renewable energy projects.
In response to China's new export controls, President Trump has threatened fresh 100% tariffs on Chinese goods being imported into the US.
The share prices of Australian producers such as Lynas Rare Earths Ltd (ASX: LYC) have run up strongly on the renewed trade tensions, but most retraced sharply on Friday.
Lynas shares were the biggest drain on the S&P/ASX 200 Index (ASX: XJO) on Friday, falling 8.9% to $18.58, dragging the company below a $20 billion market capitalisation.
The company's shares have recently traded as high as $21.96, and still remain well above their 12-month lows of $6.16.
Shares in Arafura Rare Earths Ltd (ASX: ARU) were 10.2% lower on Friday at 39.5 cents, while Meteoric Resources (ASX: MEI) shares were 7.6% lower at 21.2 cents.
Shares in Brazilian Rare Earths Ltd (ASX: BRE), which this week announced it had raised $120 million at $4.68 per share, were steady, trading 0.2% higher at $5.73, after hitting a new record high of $5.89.
