The US on Wednesday said it wants dozens of countries to join a trading bloc for critical minerals to increase members' domestic production and to defend against low-cost supplies from places like China, which produces the majority of the world's rare earths.
Under the proposal, Vice President JD Vance said members of the “preferential zone” would allow their critical minerals to benefit from a price floor that would set a “fair market value” through adjustable tariffs.
“We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers,” Mr Vance told a summit at the State Department attended by ministers and representatives from more than 50 countries.
Mr Vance said artificially cheap prices often mean domestic miners and makers are forced to close, at which point prices rise again and “the people who undercut them then jack up the price to a completely unfair level.”
“Supply chains remain brittle and exceptionally concentrated. Asset and commodity prices are persistently depressed, driven downwards by forces beyond any individual country's control,” he added.
The Office of US Trade Representative also announced a bilateral trade plan with Mexico and a trilateral arrangement with the EU and Japan to shore up critical minerals supply chain. Washington said the agreements set the groundwork for other frameworks with other countries.
US undersecretary of state for economic affairs Jacob Helberg told reporters that countries want to “de-risk” the supply chain from single “points of failure” by sourcing minerals and rare earths from a more geographically diverse supply chain.
Secretary of State Marco Rubio said critical mineral supplies are “heavily concentrated in the hands of one country, and that lends itself to, at worst-case scenario, being used as a tool of leverage and geopolitics.”
The US initiative already had 55 partners, he added, including South Korea, India, Thailand, Japan, Germany, Australia, and the Democratic Republic of Congo, all with varying refining or mining capabilities.
Delegates from several Middle East and Gulf countries including the UAE, Qatar, Jordan, Saudi Arabia, Israel, Bahrain and Oman were at the summit.
US attempts to create a critical minerals trading bloc might attract some scepticism, given President Donald Trump's recent threats to acquire Greenland and secure the vast Arctic island's mineral deposits.
Lithuanian Foreign Minister Kestutis Budrys said Vilnius is seeking to join the new initiative, either bilaterally or as part of the EU.
He told The National that export controls by Beijing last year had pushed countries to co-operate more. The speed the US is moving on the issue had given Europe a “good kick” to keep up, he added.
“I do not see the scepticism. I see the very need to have the in-depth discussion how we will regulate this trade zone, how it will function. But I have no doubts in geoeconomic design of what is being created here.”
Project Vault
The meeting comes two days after the administration announced a $12 billion initiative aimed at boosting the US's domestic stockpiles of critical minerals to reduce its reliance on China components necessary to build cars, phones and computers. Known as Project Vault, it is a public-private partnership that will be funded with $10 billion in seed money from the Export-Import Bank and roughly $2 billion in private capital.
China mines 70 per cent of the world's rare earths and 90 per cent of global rare earths processing. China placed export restrictions on rare earths amid rising trade tensions between Beijing and Washington last year after they escalated tariff threats against each other. The two economic superpowers agreed to a trade truce in October to work on a framework that would resolve the trade disputes.
China's chokehold led Mr Trump on a global search for rare earths, which became a point of focus in numerous discussions with other countries.
Last year, the US struck an agreement with Ukraine for their rare earths, while critical minerals were also a key point in separate agreements with Australia, Japan, Saudi Arabia, South Korea and Thailand.
