Source: YI CAI

Authors: Feng Difan ▪ Gao Ya

Recently, the United States has signed critical minerals agreements with several countries.

On the 28th local time, the US and Japan signed a relevant framework agreement, stating that "both countries will strengthen cooperation, utilizing policy tools such as US and Japanese financial support mechanisms, trade measures where appropriate, and establishing critical minerals stockpile systems, to accelerate securing the safe supply of critical minerals needed for domestic industries, including advanced technologies and their respective industrial bases. Participants will increase efforts to promote dialogue between upstream and downstream enterprises to diversify supply chains."

The framework agreement also lists broad areas of cooperation between the US and Japan.

Previously, the US had announced a similar agreement with Australia. This week, during US President Trump's visit to Asia, the US also signed memoranda on critical minerals with Malaysia and Thailand, respectively.

Jian GUAN, a partner at Beijing Grandwin Law Firm, said in an exclusive interview with a China Business News reporter, "These framework documents or memoranda are mostly political commitments or directional guidance, and are unlikely to have a substantive impact on a country's mineral extraction, processing, and trade policies. Even if there is an impact, it may only come after relevant cooperation in investment and technology actually materializes, potentially having a direct impact on a specific field or cooperative project."

Which Agreements?

In the framework agreement, the US and Japan discussed prospects for cooperation in areas such as investment.

Both sides also decided to convene a bilateral ministerial meeting on mining, minerals, and metals investment within 180 days from the entry into force of this framework to promote investment in the mining industry.

The US and Japan also agreed to commit to investing in mineral recycling and recovery. Through technological cooperation, they will jointly ensure the management of critical minerals to support supply chain diversification.

Additionally, the US and Japan plan to establish a rapid response mechanism, creating a US-Japan Critical Minerals Supply Security Rapid Response Group led by the US Secretary of Energy and Japan's Minister of Economy, Trade and Industry, to identify priority minerals and supply vulnerabilities, and develop coordinated plans to accelerate the delivery of processed minerals under this framework.

In comparison, the bilateral memorandum between the US and Malaysia focuses on "strengthening trade and investment between the participants in critical minerals supply chains to ensure the security and reliability of global critical mineral supplies, promote technology transfer, and advance the research, development, and application of innovative technologies."

The memorandum states, "Participants will prioritize US investment in critical mineral assets available for sale in Malaysia or by companies headquartered or incorporated in Malaysia."

Similar content appears in the US-Thailand memorandum, namely: "Participants may decide at their discretion whether a project is suitable for investment under existing agreements, but participants expect to prioritize access to investment opportunities and, subject to domestic laws, invest in critical mineral assets available for sale in Thailand or by companies headquartered or incorporated in Thailand. Investment projects will include provisions for technology transfer, capacity building, and training of domestic personnel. Cooperation should prioritize the development of domestic processing industries and value chains."

However, it is worth noting that all three bilateral documents are "non-legally binding."

Jian GUAN told a China Business News reporter that the prerequisite for the stability of these non-binding frameworks and memoranda is whether the countries signing these non-binding texts with the US can truly benefit from these agreements.

"For example, whether US investment and technology transfer can materialize and genuinely establish critical minerals industries in places like Malaysia or Thailand. If these verbal commitments and intentions for cooperation ultimately fail to materialize, they exist in name only, regardless of whether there are trade frictions or political changes," he explained.

Specifically, "Regarding the US-Japan framework, both have needs for critical minerals, so the content of the framework is more like the two partners working together to solve these problems, jointly seeking projects, investment, and financing, unlike the US-Malaysia and US-Thailand agreements, which involve local investment, cooperation, and technology transfer. Therefore, the US-Japan agreement might be more stable," he added.

What Subsequent Obstacles Exist?

As mentioned earlier, the US emphasized aspects like technology transfer in its memoranda with Malaysia and Thailand. Will this face obstacles related to law, technology, or environmental protection?

Jian GUAN told a China Business News reporter that as long as these technology transfers involve normal commercial considerations and cooperation, there should not be many legal obstacles.

"Technologically, it's unclear whether the US actually has economically viable technologies to transfer to Malaysia and Thailand. Regarding environmental protection, expanding the mining and smelting of critical minerals in Malaysia and Thailand could bring considerable environmental pressure," he stated.