AUKUS, critical minerals in focus for Australian PM on US trip

By Kirsty Needham and David Brunnstrom

SYDNEY/WASHINGTON (Reuters) - Australian Prime Minister Anthony Albanese will seek progress on the AUKUS defence technology partnership and critical mineral supply chains during a visit to Washington next week, as Canberra tries to reduce its long-term trade exposure to China.

In comments to parliament before his departure on Sunday, Albanese said the AUKUS partnership, to transfer U.S. and British nuclear submarine technology to Australia, was crucial to the future of the U.S. alliance.

He also flagged announcements on critical minerals, clean energy transformation, and an economic deal.

Peter Dean, director of foreign policy and defence at the United States Studies Centre in Sydney, said greater collaboration between the U.S. and Australia in critical technologies was likely to be a focus in Washington, delivering swifter results than the ambitious plan to build nuclear-powered submarines in Australia by 2040.

The AUKUS pact faces hurdles in the U.S. Congress, and from U.S. export controls that could slow its implementation, much to the frustration of Australian officials.

The so-called AUKUS "pillar 2" commits to jointly developing quantum computing, undersea, hypersonic, AI and cyber technology.

Australia and the United States struck an agreement in May to align on clean energy and critical minerals, when Albanese and U.S. President Joe Biden met in Japan.

Biden had been forced to cancel at short notice a visit to Australia for a summit of the Quad - grouping the United States, Australia, Japan and India - because of an impasse in Washington over the U.S. debt ceiling.

On Friday, the Biden administration submitted a supplementary budget request to Congress that included a call for $3.4 billion to strengthen the U.S. Navy’s submarine fleet and the submarine industrial base, which it said would also support U.S. commitments under AUKUS.

Twenty-five U.S. Republican lawmakers urged Biden in July to increase funding for the country's submarine fleet, saying that the plan under AUKUS to sell Australia Virginia-class nuclear-power submarines would "unacceptably weaken" the U.S. fleet without a clear plan to replace them.

Republican Senator Roger Wicker, ranking member of the U.S. Senate Armed Services Committee, called the budget request "a welcome start" but added, "it cannot stop here."

"Our shipyards are under-resourced to meet the Navy’s urgent submarine requirements as well as meet the prospective demands of the AUKUS agreement," he said. "We must work to signal to both our allies and U.S. industry that we can meet the obligations of the AUKUS agreement without putting our own submarine fleet in jeopardy."

COLLABORATION

Jeffrey Wilson, director of research and economics at the Australian Industry Group, said it was time for detailed plans on concrete industry collaboration, with rare earths a priority.

Australia has large deposits of rare earths, although most global supply is dominated by China, and investor risk has been a hurdle to developing a processing industry in Australia.

The U.S. auto and clean energy sector is one of the largest markets globally, and the Pentagon is a major buyer of strategic minerals, said Wilson.

"With many critical minerals markets dominated by Chinese state-owned enterprises, the U.S. has declared an interest in 'friendshoring' its supply chains to allied partners like Australia," he added.

In Albanese's ninth meeting with Biden since becoming prime minister in 2022, he is also under pressure to raise the case of Wikileaks founder Julian Assange. A group of Australian lawmakers pressed U.S. officials last month to drop efforts to extradite Assange, an Australian citizen, from Britain.

It is unclear whether Albanese will address U.S. Congress, amid an impasse over selecting a new Speaker.

Democratic Congressman Joe Courtney, co-chair of the Friends of Australia Caucus in Congress, told Reuters Albanese could address AUKUS-related concerns over sensitive technology.

He said Australia "has made some really impressive changes to reassure the State Department and Defense Department folks that Australia's got a good system to make sure that it's not going to end up in some company that is Chinese owned."

On Friday, Courtney hailed the new budget request, saying it "will not only help the industrial base increase production and capacity to ensure the Navy can meet its own fleet requirements, but also position the AUKUS mission for success."

(Reporting by Kirsty Needham in Sydney and David Brunnstrom in Washington; Editing by Gareth Jones and Alistair Bell)