Dr Allan Trench: mineral economist on Donald Trump signing minerals deals with Australia and Japan

US President Donald Trump has made significant progress on establishing critical mineral deals with Australia and Japan, prompting speculation from experts.

Rare earth minerals contribute to plenty of modern technology, including drones, smartphones and EVs, and these deals have seen stocks shoot up since.

Mineral economist Dr Allan Trench explained these deals further - and what investors can learn here.

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Episode Transcript

Speaker 1 (00:00):
Now rare earth minerals a bit of a talking point
at the moment across the globe because Donald Trump is
rushing deals with Japan and Australia and so on, and
these are the elements that make up our modern tech,
from evs to smartphones to military drones. And as a
result of this, Australian mining stocks are soaring some over
four hundred percent, leaving economists asking is this a boom
or a bubble now? Doctor Allen Trench is a mineral

(00:20):
economist and a professor at the University of Western Australia
and with US Alan Halo. Hello, do we know any
of the details of these deals?

Speaker 2 (00:31):
Not too much, it's just a framework at this stage.
I think the hard dollars are I think a billion
US from Australia and from the US in the next
six months. That's the sort of locked in component. And
beyond that there's promises of I've heard numbers up to
eight billion US, but we'll see a time we'll tell

(00:52):
on that.

Speaker 1 (00:52):
But the point of these deals, presumably is to get
the minerals out of the ground fast. Yeah, it is.

Speaker 2 (00:59):
Yes, there's a lot of these projects have been around
for decades. I was just looking at the share price
history over twenty years of one of the rare earth developers,
and the last time rare Earth peaked back in twenty eleven,
they were hoping to get into production then, and fifteen
years later, here we go again.

Speaker 1 (01:19):
And so do you think I mean the point also
is to get the stuff out of the ground quickly
in order to cut China out. I would imagine. So
does the sale of the rare earth minerals then have
to be exclusive to exclusive to the US?

Speaker 2 (01:34):
To be honest, I don't know in the framework I
would anticipate so from what we hear from Donald Trump,
of course, But my comment would be that there's plenty
of rare earth. I'm sure you've heard the phrase before
at rare earths are not actually that rare. So there
are lots and lots of deposits around the world, plenty
of them in Australia. My personal perspective is there's plenty
to go around.

Speaker 1 (01:54):
Okay. Is there a chance that digging all the stuff
out of the ground in a rush could actually up
the value of you know, could basically burst the bubble?

Speaker 2 (02:05):
Well, it's interesting, actually, rare earth prices are actually pretty
low at the moment, and the West as it were,
would make the argument that China are purposely keeping the
prices low to stop these new projects from getting into production.
So quite what we're hearing is that the sort of
the Trump and other allies are willing to set things

(02:25):
like floor prices above the current prevailing prices out of
China to get these projects into production.

Speaker 1 (02:31):
Yeah, how much what have you guys got on the
ground in Australia.

Speaker 2 (02:36):
Lots and lots of projects I think, and of course
with the interest in rare earth, they're almost being discovered
by the month quite frankly, so the sort of leaders.
We've got one producer, Linus Corporation, that's been producing for
around a decade or so now. A couple of larger projects,
Arafura have just raised I think the number was seven
hundred million dollars in equity on the back of the

(02:56):
extra interest the Luka Resources about three billion dollar company,
and Linus themselves have again raised around about that seven hundred.
My apologies at Rafa was five hundred new raising, Lionus
just raised about seven hundred. So the interest in the
market is unlocking new equity into these projects.

Speaker 1 (03:15):
What do you Reckon's the big strategic reason why Donald
Trumps so interested in it.

Speaker 2 (03:21):
I would say it pretty much as you said in
your introduction, really from a defense perspective. You need this
for planes, you need it for ships, you need it
for submarines, and all the guidance systems and all of
the things that all of those three types of defense
capabilities actually shoot out of themselves. So it's very much
a defense player. I would say, is it is it.

Speaker 1 (03:44):
For defense or is it preparing for war? Do you think.

Speaker 2 (03:48):
That one's about my pay grade? I'm afraid so I've
given that. He's renamed the Department of Defense the Department
of War and you know, let's hope it's just posturing.

Speaker 1 (03:59):
Well, let's hope so. And it's fascinating to talk to you.
Thank you very much for that, Doctor Allen Trench, mineral
economist and a professor at the University of Western Australia.
I suppose the difference between defense and wars sometimes is
just semantics, isn't it. For more from Heather Duplessy Alan Drive,
listen live to news Talks.

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