Australia's critical minerals industry has broadly welcomed the wide-ranging rare earths deal struck between the US and Australia, as analysts say it will strengthen the rare earths supply chain outside of China.

The US and Australia will each invest at least $US1 billion ($1.5 billion) over the next six months to unlock an $US8.5-billion pipeline of critical mineral projects in an attempt to shake China's global dominance.

The Minerals Council of Australia said the US-Australia Critical Minerals Framework would encourage greater investment in Australian mining and processing.

"This is an acknowledgement of Australia's strategically important role in the development of new technologies, defence capabilities and renewable energy infrastructure," CEO Tania Constable said in a statement.

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