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UPDATE 2-U.S., Australia to unveil plan Friday to improve rare earth mineral supply

(Adds details about Australia's rare earth supply)

WASHINGTON, Sept 19 (Reuters) - U.S. President Donald Trump and Australian Prime Minister Scott Morrison are set to release a plan on Friday aimed at securing the supply of rare earth minerals, a senior administration official said, as concerns grow that China could cut off shipments of the prized commodities.

The plan will be unveiled during a state visit by Morrison to the White House, where space cooperation and plastic waste management will also be discussed, the official said on Thursday.

"Both countries share an interest in making sure the global supply of rare earths is stable and secure," the official said. The goal of the plan, he added, was to pool expertise and resources "to make sure there's a stable and secure global market that's not easily disrupted by shocks and outside influences."

Rare earths are a group of 17 chemical elements used in everything from high-tech consumer electronics to military equipment.

Australia contains only 2.8% of the world's rare earth reserves, but accounts for more than half of the new projects in the global pipeline.

Rare earth minerals need to be processed after they are extracted from the ground. There is only one operational rare earths mine in the United States, although the country has no processing facilities.

China is the world's largest processor and producer of the minerals, accounting for more than 80% of global processing capacity.

After trade talks broke down in May, Chinese President Xi Jinping visited a rare earths plant, sparking speculation that China would use its dominant position as an exporter of rare earths to the United States as leverage in the trade dispute.

Chinese negotiators are in Washington for talks as the world's two largest economies try to bridge deep policy differences and find a way out of a protracted trade war.

A Pentagon official said in August the Defense Department was in talks with Australia to host a facility that would process rare earth metals. The White House official did not respond on Thursday when asked if the plan set to be unveiled would involve such facilities.

Australia's Lynas Corp Ltd, the world's largest rare earths miner and processor outside of China, is developing a processing plant in Texas. Chief Executive Amanda Lacaze said last month the company was open to receiving U.S. government funding to build it.

(Reporting by Alexandra Alper and Roberta Rampton; Additional reporting by Melanie Burton in Melbourne; Editing by Peter Cooney)