China dominates the production of metals used in everything from solar panels to precision missiles -- and has threatened to strangle supplies in a tit-for-tat trade war with Washington.

Australia and the United States will jointly pump around $3 billion into critical minerals projects over the next six months.

Here are five things you should know about Australia and critical minerals.

- Treasure trove -

Government figures show Australia is among the world's top five producers of lithium, cobalt and manganese, which enable things like rechargeable batteries and aircraft jet engines.

It is also home to substantial deposits of rare earth elements -- a subset of critical minerals -- such as neodymium and praseodymium.

These rare earth metals are used to make strong magnets with myriad military and industrial applications.

- Unfinished product -

Australia is very good at digging up these minerals, but like most other mining nations has struggled to process them onshore.

More than 90 percent of Australia's lithium is shipped off each year to the hulking refineries of China.

Australian efforts to build refining capacity have been held back by environmental concerns and the high cost of infrastructure.

- Breaking the monopoly -

China is easily the world's largest refiner of lithium and nickel, and has a near monopoly on the processing of rare earth elements.

Beijing has previously banned the export of processing technology that could help rival nations and has been accused of using state-imposed quotas to manipulate supply in the past.

Analysts say Australia poses little threat to this dominance -- but could offer a reliable, albeit smaller pipeline that lessens the risk of relying on China.

- No secrets -

Australian company Lynas bills itself as the "world's only significant producer of separated rare earth materials outside China".

The US government has already agreed a $258 million contract for Lynas to build a new refinery in Texas.

- Foreign meddling -

Australia is worried that the growing strategic importance of critical minerals could see foreign powers try to infiltrate homegrown mining companies.

"Australian critical minerals companies are a target for a range of foreign actors seeking to gain a commercial, technological or strategic advantage," reads an official advisory from March.

Last year, the government forced a string of Chinese shareholders to sell their stakes in Australian rare earths business Northern Minerals.