"The commodities you manage are not only the basis for our economies - our future national security, and the health of the planet, depends on them as well," United States ambassador to Australia Caroline Kennedy said on Wednesday.

"And they are under assault," Ms Kennedy told day two of the Paydirt Battery Minerals Conference in Perth.

Australia may be a top source of raw minerals and rare earths but China still has a stranglehold on factory-ready materials and bankrolls Indonesian operations that have flooded the market with cheap nickel.

Ms Kennedy said Australia's Resources Minister Madeleine King was a "tireless advocate" for global standards in mining, "rather than allow unchecked exploitation by state-owned Chinese companies in Indonesia and elsewhere."

"We can't let them destroy vulnerable communities and the markets for Australian minerals under the guise of economic development," Ms Kennedy said.

Almost a year ago, President Joe Biden and Prime Minister Anthony Albanese declared climate change, critical minerals and clean energy as the "third pillar" of an alliance that has been a security and economic partnership for decades.

Ms Kennedy said the pact made the expertise of Australia's mining industry even more important for cooperation in the resources industry, space and satellite technology and autonomous vehicles.

"The climate crisis is a global challenge which requires urgent international action ... It is also a massive business opportunity," she said.

"No two countries are better positioned to benefit than the US and Australia," she said.

However, mining profits are sliding, with customers not yet required to pay a premium for higher standards, and investors are wary as China's market stranglehold continues.

Australian nickel producers have already mothballed mines amid a glut of cheap Indonesian metal.

Mining giant BHP issued a "call to arms" to federal and state governments two months ago to make sure the entire Australian mining industry remains competitive.

Australia's Lynas, the biggest producer of rare earths outside China, has also warned of market contagion.

Ms Kennedy said the Inflation Reduction Act (IRA) had already stimulated more than $US5 billion of American investment in Australia, and US automakers had more than $A19 billion in offtake agreements.

Over the next 10 years, US laws are forecast to bring $US1.5 trillion for manufacturing, electric vehicles, clean energy and energy transmission.

Ms Kennedy said the alliance can safeguard rules-based order and trade routes for Australian resources, as well as high environmental and labour standards for workers.

But the conference heard on day one that the full implications of US laws were unknown for Australia's China-backed mines and processing plants - for lithium in particular.

"Until the formal rule-making process to determine foreign entities of concern are finalised, the full implications of the IRA are unknown," WA Mines Minster David Michael said.

China is a long-standing investor in Australian commodities - and a top customer.

Australian Associated Press