Australia and the United States have launched a $3.5 billion critical minerals partnership, marking one of the largest bilateral efforts to secure materials essential for clean energy and electric vehicles (EVs).
The agreement focuses on strengthening supply chains for minerals such as lithium, cobalt, nickel, and rare earth elements. These materials are vital for batteries, solar panels, wind turbines, and other low-carbon technologies.
The deal comes as global demand for these minerals rises sharply. The International Energy Agency estimates that demand for critical minerals could quadruple by 2040 under net-zero scenarios. Lithium demand alone could grow more than 40 times by 2040, driven by EV adoption and battery storage.
Australia plays a central role in this supply chain. It currently produces about 55% of the world’s lithium, making it the largest global supplier. However, much of the processing still takes place overseas, creating supply risks for Western economies.
The new partnership aims to address this gap by boosting both extraction and domestic processing capacity.
Billions Back the Full Value Chain—from Mine to Market
The $3.5 billion investment will be deployed over seven years. The United States will give around $2.1 billion. This funding comes from the Defense Production Act and the Infrastructure Investment and Jobs Act. Australia will provide $1.4 billion through national financing programs.
The funding is designed to support the full value chain, from mining to refining to advanced research. The main areas of investment include:
- $1.8 billion for new mining projects and infrastructure upgrades
- $1.2 billion for processing and refining facilities
- $500 million for research, innovation, and sustainable extraction technologies
A key goal is to reduce reliance on external processing markets and build more resilient supply chains. This includes expanding refining capacity for lithium and rare earth elements, which are often processed outside producing countries.
The partnership is also expected to create economic benefits. Government estimates say about 15,000 direct jobs will be created. Additionally, around 30,000 indirect jobs will come from supply chains and related industries.
Breaking China’s Grip on Mineral Processing
The agreement reflects growing concern over the concentration of mineral processing in China. Currently, China dominates key parts of the global supply chain.
According to the International Energy Agency:
- China handles about 60% of global lithium processing
- It controls more than 80% of rare earth refining
- It also leads in battery component manufacturing
This dominance creates risks for supply security, pricing, and geopolitical stability. Disruptions in one region can affect global clean energy deployment.
By investing in alternative supply chains, Australia and the United States aim to diversify production and reduce these risks. The partnership could also encourage other countries to develop their own critical minerals strategies.
In addition, the deal may help stabilize prices for key materials. Volatility in lithium and nickel markets has impacted EV production costs. It has also delayed some renewable energy projects in recent years.
Supporting Climate Goals and the Energy Transition
The partnership has direct implications for global climate efforts. Critical minerals are essential for scaling clean energy technologies. Without a reliable supply, the pace of decarbonization could slow.
Battery storage is a key example. Energy storage systems help manage the variability of renewable energy sources like solar and wind. Expanding mineral supply will support the growth of these systems.
The IEA projects that global battery capacity must increase significantly to meet climate targets. Some estimates suggest energy storage capacity needs to grow more than sixfold by 2030 to stay on track for net-zero emissions.
The US-Australia alliance could help unlock this growth by ensuring stable access to raw materials. This, in turn, may reduce costs for batteries and renewable energy systems over time.
Both countries have also committed to improving environmental standards in mining. This includes reducing emissions, improving water management, and limiting land impacts. These measures are important because mining itself can be carbon-intensive.
Efforts to lower emissions in mineral extraction could also influence carbon accounting frameworks. As supply chains become more transparent, companies may need to track and report emissions linked to raw material sourcing.
ESG, Carbon Markets, and the New Mining Reality
The expansion of critical minerals supply chains is expected to influence carbon markets and ESG strategies.
As mining activity increases, so does the need to manage emissions. This could increase the need for carbon credits in the extractive sector. This is true for projects that cut or offset emissions from mining.
At the same time, improved supply chains for clean technologies may accelerate renewable energy deployment. This could support carbon reduction efforts across multiple sectors, including power generation and transportation.
The partnership may also lead to higher standards for responsible sourcing. Materials produced under strict environmental and social guidelines could command a premium in global markets.
This shift aligns with growing investor focus on ESG performance. Companies face growing pressure to show that their supply chains meet sustainability standards. This includes tracking emissions across Scope 1, 2, and 3 categories.
Over time, these trends could reshape how carbon credits are used. Companies may focus more on cutting emissions directly in their supply chains, rather than just using offsets.
Industry Scrambles to Secure the Next Wave of Supply
The announcement has received strong support from industry players. Major automakers and battery manufacturers are seeking secure and stable supplies of critical minerals. Companies like Tesla, Ford, and General Motors want to source materials from projects tied to the partnership.
Mining firms are also responding. Albemarle Corporation and Pilbara Minerals will likely gain from more investment and quicker project timelines.
Investor interest in the sector is rising as well. Global spending on energy transition minerals is growing rapidly, supported by both public and private capital.
The International Energy Agency reports that investment in critical minerals has increased sharply in recent years. This trend is expected to continue as countries compete to secure supply chains for clean energy technologies.
A Defining Shift in the Global Energy Economy
The $3.5 billion Australia–US critical minerals partnership represents a major step in reshaping global energy supply chains. It addresses a key bottleneck in the transition to a low-carbon economy: access to essential raw materials.
In the short term, the deal may help stabilize supply and reduce risks linked to market concentration. In the long term, it could accelerate the deployment of clean energy technologies and support global climate goals.
For carbon markets, the impact is indirect but important. More minerals can help speed up the use of renewables and energy storage. This, in turn, cuts emissions throughout the economy. At the same time, higher mining activity may drive demand for carbon credits and new emissions reduction strategies within the sector.
The success of the partnership will depend on execution. Expanding mining and processing capacity takes time, investment, and strong environmental oversight.
If these challenges are addressed, the alliance could serve as a model for future international cooperation on critical minerals. It also highlights how energy security, economic policy, and climate action are becoming increasingly connected.
Ultimately, as demand for clean energy continues to grow, securing sustainable and reliable mineral supply chains will remain a key priority for governments and industries worldwide.
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Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.
1. Define the sourcing problem before choosing a project
Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.
This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.
CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.
2. Develop nature-based carbon investments around the actual supply chain
The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?
Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.
Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.
The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.
3. Compare the proposal with other ways to protect supply
WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.
The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.
The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.
The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.
4. Establish what the carbon outcome could count toward
Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?
Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.
SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.
For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.
Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.
5. Build a financial case that survives weaker assumptions
Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.
Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.
Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.
A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.
6. Fund a pilot with a clear expansion decision
Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.
Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.
Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.
This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.
Discuss a sourcing opportunity with CCC
Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.
Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.
Sources
- Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
- World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
- Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
- United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.
EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.
