Deal aims to secure scandium supply as China restricts exports for defence products.

The United States Department of Defense has announced a $400m conditional loan commitment to an Australian company to build the world’s first primary mine for scandium, a critical rare earth element whose market is dominated by China.

After a meeting between US President Donald Trump and mining executives in Washington, the Pentagon said in a statement on Friday that the project would “ensure Western alignment from mine to finished product”.

Australian mining firm Sunrise Energy Metals said in a separate statement that the proposed mine in Fifield, New South Wales, would aim to become “a cornerstone of Western scandium supply”.

According to the company’s website, the “Syerston Scandium Project” will provide a “critical metal for critical technologies”, including aerospace and 5G/6G telecommunications technology.

Scandium — a rare earth needed for defence, planes and data centres — is usually sourced as a byproduct of other mining. It is valued for being one of the most effective elements to strengthen aluminium while also being flexible and resistant to heat and corrosion.

New South Wales has some of the highest concentrations of scandium globally. China, which dominates the supply and processing of scandium, restricted its exports for defence products last year, triggering the US’s search for new suppliers.

Trump and Australian Prime Minister Anthony Albanese signed a critical minerals agreement aimed at countering China in October, pledging that each would invest $1bn in projects.

Sunrise struck a deal with Lockheed Martin last year to sell the defence and aerospace manufacturer 25 percent of its scandium output for the first five years of the mine.

On Friday, Trump said the US federal government would invest $3bn in multiple critical minerals and battery projects as part of a push to increase domestic production and boost national security and industrial policy.