The USA has launched an International Coalition to curb China’s dominance in sourcing critical minerals (like lithium for electric vehicle batteries, rare earths needed to make consumer electronics and military systems, etc.) from overseas. The initiative aims to support global supply chains of critical minerals that are necessary for Smartphones, Automobiles, Renewable Energy, Defense and Aerospace.
The coalition was established at the first Critical Minerals Ministerial in the US, hosted by US Secretary of State Marco Rubio and attended by representatives from over 50 countries, including but not limited to India, Japan, European Union, Australia, Democratic Republic of Congo, and others.
The following types of products use critical minerals: semiconductor chips, electric vehicle batteries, wind turbines, solar panels, etc.
Today, China controls the mining, processing and refining of many of these minerals (providing it with constructive control of the entire supply chain). Therefore, the current concentration in critical mineral mining in China poses significant economic and national security risks to the United States and its allies.
New trade bloc and pricing strategy
The United States is working with its allies to set up a preferential trading zone for strategic minerals, along with the development of coordinated policy among nations that share these countries.
Some of the elements of this plan include:
1) Building and enforcing a system of tariffs that will prevent foreign prices from falling too low;
2) Establishing minimum reference prices for production;
3) Providing shared financing for mining programs;
4) Providing joint funding for processing;
According to Vice President JD Vance, this goal is to eliminate the impact upon domestic and allied industries of low-cost foreign supply.
“We are going to establish reference prices at all levels of production,” Vance said. He emphasized that tariffs would prevent foreign prices from affecting domestic and allied manufacturers.
New partnerships and new funding sources for minerals development were announced by Washington following a Ministerial meeting with the Group of Seven:
1) 11 countries signed bilateral agreements with the United States for critical minerals trading;
2) 17 additional nations are in negotiations with the United States;
3) A new organization will be established called the FORGE (Forum on Resource Geostrategic Engagement); and
All of this continues the work started through previous initiatives such as Pax Silica, which was focused upon the supply chain associated with the development of AI technology.
Special assistant David Copley indicated that the United States is committing to provide hundreds of billions of dollars toward mining and processing projects. MP Materials and Lithium Americas are two of the companies that have already received funding for their projects.
This week, President Donald Trump announced the establishment of Project Vault, which will create a critical minerals reserve of approximately $12 billion to stabilize prices and support manufacturers.
China’s Rising Influence
China’s control over rare earth exports has become stricter in recent months, requiring government approval for all shipments. The recent tightening of these rules has affected numerous global industries and demonstrated the high dependency of these industries on Chinese supply chains.
Some restrictions have since been lifted, but analysts continue to believe that China will use these minerals as bargaining chips in future trade agreements.
Before the summit, Chinese officials called on nations around the world to adhere to market regulations and refrain from politicizing trade.
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Timing is Everything
The announcement regarding the new alliance was made on the same day that President Trump had what he called a “very positive” phone conversation with President Xi of China.
However, U.S. officials have made it abundantly clear that diversifying away from China is a long-term goal.
Industry leaders have welcomed this initiative as one that could help revive many stalled mining projects and fortify Western supply chains. However, constructing new mines and/or refineries typically takes years.
While establishing the new alliance will represent a significant departure from previous U.S. strategy, its success will depend upon committed funding levels, a high degree of political cooperation among governments, and a willingness on the part of partner nations to work together.
For now, Washington’s message is simple: securing access to critical minerals is becoming a key element of both economic security and national security policy in an increasingly competitive world.
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