Navigating The US-Australia Critical Minerals Corridor – Five Essential Insights (Video)

Australia's critical minerals sector is pivotal to the global energy transition, and recent developments such as the US-Australia Critical Minerals Supply Framework are unlocking new opportunities for collaboration between the two nations. The United States is a key source of funding and market access, while Australia offers reliable raw materials and mining expertise.

In our recent webinar, Navigating the US-Australia critical minerals corridor, we unpacked the ambitions, challenges, and opportunities shaping the future of critical minerals. With both nations seeking to secure supply chains, attract investment, and foster strategic partnerships, the session delivered practical guidance for organisations looking to thrive in a rapidly evolving sector.

View the recording here:

1. Investment momentum across borders

The US-Australia corridor is rapidly becoming a focal point for global investment in critical minerals. Both countries recognise the strategic importance of securing supply chains for minerals essential to the energy transition, defence, and advanced manufacturing. The US, with its vast private capital markets, is increasingly directing investment towards Australian mining projects, while Australian companies are exploring greenfield opportunities in the US. This two-way flow is driven by a shared commitment to reducing reliance on single sources and enhancing resilience.

As Jay Leary remarked, "We're only just scratching the surface for private capital to come into the mining sector in Australia." Recent months have seen a surge in US offtake agreements and inbound investment, signalling a new era of collaboration and growth.

2. Financing complexity and the role of government

Financing critical minerals projects is complex, with unique hurdles that set them apart from other commodities. Unlike gold or copper, many critical minerals – like lithium and rare earths – lack established market indices, leading to significant price volatility and uncertainty for investors.

Debt financing is often constrained by the absence of long-term offtake agreements, which are crucial for lenders seeking predictable revenue streams. Equity financing faces its own challenges, including the capital-intensive nature of projects (which often need to account for multiple stages of processing and refining) and lengthy investment horizons that may not align with fund lifecycles.

Government involvement has become a cornerstone of critical mineral project finance, with agencies in both Australia and the US stepping in to provide loans, guarantees, and direct equity stakes. Andrew McLean emphasised that the policy impetus for Government lenders means they can approach the bankability risks inherent in critical minerals projects differently to a commercial lender, and by doing so can crowd in other sources of capital across debt and equity.

3. Cross-border M&A and joint ventures

Nicole Pedler observed that the market is seeing a marked increase in cross-border M&A activity, with transactions flowing in both directions and policy settings encouraging this dynamic. She noted that merger of equals transactions between US and Australian entities are becoming more prominent, raising questions about where the merged entity should be domiciled and how listings are managed. Nicole highlighted the growing complexity of regulatory approvals and disclosure requirements, suggesting that early engagement with regulators such as ASIC and the SEC is essential to streamline processes and avoid unnecessary hurdles. Looking ahead, she expects further refinement in deal structures, with contingent consideration and creative value adjustments likely to become more common as parties seek to manage volatility.

Jay Leary added that joint ventures remain a preferred structure for investment into Australia, particularly unincorporated joint ventures, although the market is seeing a shift in offtake terms as US companies enter the Australian market. Buyers from Asian states have traditionally dominated offtake agreements, but increased US participation is likely to reshape market standards and risk profiles.

4. Entering the US market: Practical considerations

For Australian companies seeking to expand into the US, navigating the local landscape requires careful preparation. One notable difference is the reduced reliance on unincorporated joint ventures, thanks to the availability of LLCs, which offer significant tax benefits and governance flexibility. Danielle MacGillivray explained that "if you are investing into the US and you're looking to set up an entity, it will actually matter quite a lot which state you choose to establish that entity in." Beyond corporate structure, companies must contend with federal approvals such as CFIUS and HSR, which assess national security and competition concerns. State-level laws and incentives vary widely, affecting everything from environmental approvals to royalties and land access.

Understanding these nuances, anticipating long lead times for permitting, and leveraging government support are essential for a successful market entry. Danielle also cautioned not to underestimate the differences between the US and Australia, noting that legal frameworks, market norms, and ESG priorities can vary dramatically and require careful consideration.

5. Government policy as a cornerstone

Throughout the discussion, the central role of government policy was clear. Both the US and Australian governments are actively shaping the future of critical minerals through direct investment, financing programmes, and regulatory reforms. Policy initiatives aim to streamline permitting, encourage domestic production, and reduce reliance on imports, particularly from countries like China. Government agencies are not only providing funding but also acquiring ownership interests and offering technical assistance.

Staying attuned to policy shifts and engaging proactively with stakeholders is vital for organisations looking to capitalise on emerging opportunities. As the sector evolves, those who understand and anticipate government priorities will be best positioned to succeed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.