Group of Seven member countries have announced a new effort to boost co-ordination on reducing their dependency on Chinese imports of critical minerals, a move that is receiving pushback from Beijing.
While the text did not mention China by name, G7 member countries said no country should supply more than 60 per cent of their rare earth imports, with an aim to reach 50 per cent as soon as possible. China accounts for 90 per cent of global rare earth minerals processing.
The joint communique also included plans to expand the role of the International Energy Agency, which last year warned that high market concentration could leave global supply chains vulnerable to potential disruptions.
Wednesday's joint communique focuses on two metals in particular: nickel and lithium. These two metals are essential for energy technologies such as batteries and the permanent magnets used in wind turbines and electric vehicle motors.
The G7 said it would seek to extend the pilot to five new critical minerals each year with an added focus on rare earths.
The announcement was criticised by the Chinese government. Foreign Ministry representative Lin Jian said on Thursday that Beijing urged G7 leaders to stop “imposing rules of small cliques” and defended China's export control system, Reuters reported.
Building out these supply chains is expected to cost billions of dollars, and the communiqué encouraged multilateral development banks and development partners to speed up the design and implementation of strategies among G7 countries, their partners and others in developing countries.
The US and other western nations have been racing in recent months to shore up the global critical minerals supply chain after Washington's trade row with Beijing exposed their vulnerabilities last year. In October, Beijing announced some of its strictest curbs on rare earth and permanent magnet exports.
As part of a broader “energy dominance” agenda, President Donald Trump's administration has announced a series of plurilateral trade agreements and bilateral agreements with India, the UAE, Japan and others on shoring up the critical minerals supply chain. And in March, the US launched the Forum on Resource Geostrategic Engagement – or Forge – to create preferential trade zones and price floors for critical minerals and rare earths. The US also launched a $12 billion critical minerals reserve titled Project Vault earlier this year.
“But it's also the case that the other members of the G7 are doing as well, and I think that's a reflection of the fact that the G7 isn't what it once was, insofar as you have unprecedented … levels of policy disputes and trade disputes among the various members,” said Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics.
While the communiqué points to increased co-ordination among G7 members, it also comes after Mr Trump placed tariffs on fellow G7 members and as Washington has warned its Nato partners that it would reduce the military resources it commits to the alliance.
Mr Hendrix said the geopolitical undercurrents point to an acknowledgement from G7 countries that they recognise the importance of diversifying their efforts to bolster the procurement of critical minerals.
“So in that context I think all of the countries see a need for some co-ordination and see the benefit of tackling this problem collectively, but for national sovereignty and policy autonomy reasons unwilling to put all of their eggs in the single basket,” Mr Hendrix said.
Kevin Brunelli, a non-resident fellow at Columbia University's Centre on Global Energy Policy, wrote in a blog that the absence of an agreement on trade mechanisms reflected disagreements among members about how to balance the need for diversification with the “challenges of manufacturing competitiveness”.
G7 leaders reaffirmed their commitment to diversifying critical minerals supply chains at recent meetings in Evian, but again didn’t reach agreement on how to do so.
