Australia plans deal with US on 'critical minerals', hopes to boost its exports

MELBOURNE- Australia is this week set to sign a preliminary deal with the United States to support joint research and development of minerals deemed critical to the U.S. economy, a government minister said on Wednesday.

That comes as Washington is looking to diversify its sources of supply for 35 minerals used in smartphones, computers and military equipment amid a festering trade war with China.

"This week I will sign a letter of intent with my counterpart … on critical minerals," resources minister Matt Canavan said at a mining industry event in Melbourne.

"(This) will mean Geoscience Australia and the United States Geological Survey (USGS) will work closely on exploration, extraction, processing and research and development," he added, referring to the arms of the respective governments that handle minerals exploration.

Australia hopes to supply more minerals to the United States in the wake of the agreement, said Canavan. He expects to speak with U.S. Interior Secretary Ryan Zinke on Thursday.

"For 14 of those 35 critical minerals, we are in the top five (holders) of world reserves, so they are the ones we'd like to focus on," he told press at the Melbourne Mining Club event.

That list of minerals includes lithium used in batteries, along with rare earths such as neodymium, used in industrial magnets, and gallium, used to make semiconductors. It also includes bauxite and alumina, which make aluminium.

China typically supplies around 80 percent of the globe's rare earth needs. Its exports jumped by nearly 50 percent in November from October, customs data showed.

(By Melanie Burton; Editing by Joseph Radford)