G7 Unveils Major Strategy to Break China’s Critical Mineral Dominance

G7 leaders have announced a coordinated global strategy to reduce their dependence on China for critical minerals essential to the future of technology. By leveraging international partnerships and new supply chain mechanisms, the group aims to secure the raw materials necessary for defense, artificial intelligence, and the green energy transition.

Targets for Diversification and Supply Chain Security

A primary goal of the new G7 mandate is to drastically reduce reliance on any single supplier outside the group. For rare earth elements and permanent magnets, leaders have set a specific target to bring reliance below 60% by 2030, with a long-term objective of reaching 50% as soon as possible.

This move follows recent disruptions caused by China’s export restrictions on permanent magnets, which highlighted the vulnerability of Western industries. To prevent such shocks, the G7 will establish "harmonised, interoperable mechanisms" for supply chains. The initiative will begin with pilot projects focusing on two key minerals: lithium and nickel. Following these pilots, the group intends to add five additional minerals to the framework every year, with a heavy emphasis on rare earth elements.

The Role of IEA and New Coordination Platforms

To ensure market stability, the G7 will establish a dedicated platform to coordinate policy, facilitate data sharing, and respond to sudden supply disruptions. The International Energy Agency (IEA) has been tapped to play a vital role in this ecosystem, providing market monitoring and issuing "early warnings" regarding market distortions.

To protect against future volatility, the G7 is also prioritizing stockpiling and recycling. The United States has already moved forward with "Project Vault," a $12 billion critical minerals reserve, while the European Union is shortlisting tungsten, rare earths, and gallium for its own joint stockpile. Furthermore, the group aims for G7 recycling systems to account for a significant portion of annual mineral consumption by 2030.

The Massive Investment Gap and Challenges

Despite the ambitious targets, significant hurdles remain. China currently controls approximately 90% of global production for processed rare earths and permanent magnets. Analysts warn that transitioning away from this dominance requires more than just political willpower; it requires massive capital injection into the midstream and downstream segments of the value chain.

Building alternative supply chains—from mining to final product processing—will require billions of dollars. While 195 critical mineral projects have been announced since the start of 2026, involving an estimated €64 billion ($74 billion) in investment, the scale of the challenge is immense. The G7 is calling on development finance institutions, export credit agencies, and private corporations to bridge this investment gap.

Key Takeaways