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Australia gets U.S. backing for critical minerals industry

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MELBOURNE, May 22 (Reuters) - Australia has won the support of the United States for development of its critical minerals industry after the two countries reached an agreement to coordinate polices and investment to support the industry's growth.

Australia supplies around half of the world's lithium as well as other minerals like rare earths used in batteries for electric cars and defence, and is also setting itself up as a major hydrogen producer.

The agreement paves the way for Australian suppliers of these minerals, and renewable energy, to be treated as domestic suppliers under the U.S. Defence Production Act, Australian Prime Minister Anthony Albanese said on Sunday.

That means Australian suppliers will be able to access energy subsidies as outlined in the landmark U.S. Inflation Reduction Act (IRA) legislation which has reinvigorated global renewable energy supply chains since it was set down in August.

"This is about creating an enormous opportunity for Australia and I can't underline how significant this is," Albanese told press at the Quad Leaders Summit in Hiroshima.

The big risk with the Inflation Reduction Act is that Australia could lose capital to the United States, but U.S. President Joe Biden will support the Congress taking action to treat Australian suppliers and activity as domestic activity in the United States, he added.

Ministers from the U.S. National Security Council and Australia’s Department of Industry will take part in a task force that will develop a plan by the year end to encourage stronger industrial collaboration and speed up development, the two leaders said in statements announcing the deal on Saturday.

The compact will establish climate, clean energy and a shared energy industrial base as a central pillar of the Australia-United States Alliance, they said.

(Reporting by Melanie Burton; Editing by Michael Perry)

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