Highlights

• U.S. Treasury Secretary Scott Bessent is convening G7 nations and key partners representing 60% of global demand to urgently diversify away from China's 70% control of 19 out of 20 strategic minerals.
• The U.S.-Australia critical minerals pact pledges $2 billion in six months with price floor protections, building on Japan's successful post-2010 strategy that cut Chinese import dependence from 90% to 58%.
• Experts warn that breaking China's stranglehold requires comprehensive industrial policy across the entire value chain—mining, refining, manufacturing, recycling, and stockpiles—not just opening new mines.

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The United States is rallying allies to curb over-reliance on China’s rare earth and critical minerals. U.S. Treasury Secretary Scott Bessent has convened finance ministers from the G7 nations and key partners – including Australia, India, South Korea, Mexico and the EU – representing roughly 60% of global critical mineral demand. “Urgency is the theme of the day… we really just need to move faster,” a U.S. official stressed ahead of meetings in Washington.

Bessent has pushed for this dedicated gathering since the G7 summit in mid-2025, where leaders agreed to secure supply chains but have made frustratingly slow progress. He plans to press counterparts for swifter action to diversify sources of rare earth elements, vital for defense systems, electric vehicles, wind turbines, and semiconductors. This is the right direction.

China’s Dominance and Export Leverage

Concern is rising because China still dominates the rare earths supply chain, from mining to refinement. The International Energy Agency notes that China refines between 47% and 87% of the world’s lithium, cobalt, graphite, copper and rare earths. In practice, Beijing holds an average 70% share of production for 19 of the 20 most strategic minerals, and an even tighter grip on processed rare earth magnets. Western nations remain heavily dependent on Chinese supply – a strategic vulnerability China has not hesitated to exploit.

In 2010, China abruptly cut off rare earth exports to Japan during a diplomatic dispute, spiking global prices and jolting Tokyo into action. More recently, Beijing has threatened strict export controls on critical minerals and reportedly started restricting shipments of rare earth oxides and high-strength magnets to Japan’s industry, even banning certain tech exports to Japan’s military. Aside from Japan – which took aggressive steps after 2010 – most G7 countries still import the bulk of their rare earths from China. This leverage is exactly what the new U.S.-led coalition aims to defuse.

Allies Respond: Investment and Supply Chain Initiatives

American and allied leaders are moving to fortify alternative supply lines. Japan’s response to the 2010 embargo offered at least a blueprint: within a decade it slashed China’s share of Japan’s rare earth imports from 90% down to 58% by investing in overseas mines, new materials, and recycling. A landmark deal in 2011 saw a Japanese consortium rescue Australia’s Lynas Corp with a $250 million lifeline in exchange for long-term supply – an investment that saved Lynas from collapse and now provides over one-third of Japan’s rare earths supply.

The United States is also forging partnerships. In October 2025, Washington and Canberra signed a critical minerals pact, each pledging at least $1 billion in the next six months to jump-start new rare earth mines and processing plants – and even agreeing to establish a price floor to prevent China from undercutting Western producers. The U.S. Export-Import Bank followed up with letters of interest totaling more than $2.2 billion to finance Australian rare earth and battery metal projects. This U.S.-Australia initiative includes an $8.5 billion project pipeline tapping Australia’s proposed strategic reserve of rare earths and lithium. Early results are promising: Canberra reports surging interest from Europe, Japan, and others in collaborating on these supply chains. Still, Bessent cautions that far more work is needed to truly solve the dependency problem. The coalition’s mantra, he says, is to “move with those who feel a similar level of urgency … and others can join as they realize how serious this is”.

Beyond Mining: Toward a Comprehensive Rare Earth Strategy

Analysts emphasize that breaking China’s stranglehold will require more than opening new mines – it demands building an entire end-to-end supply ecosystem. As Rare Earth Exchanges™ has repeatedly argued, market forces alone cannot surmount China’s decades-built structural advantages in mining, refining, and manufacturing. Beijing’s state-backed strategy – from cheap exports to targeted export bans – has driven almost all competitors out of business over the past 30 years.

Without coordinated public support across the value chain, Western rare earth projects face bleak odds: new mines risk failure if there’s no domestic processing plant or magnet factory to take their output, or if China floods the market to undercut prices. That’s why experts call for a comprehensive industrial policy. A resilient strategy would invest in every link: mining exploration, faster permitting, local separation facilities, magnet manufacturing, recycling programs, and even stockpiles and R&D into substitute materials.

Such measures echo the very tactics China employed to achieve its near-monopoly. The hoped-for global coalition can coordinate these efforts – sharing financing, technology, and offtake agreements – so that a diverse rare earth supply chain can flourish beyond China’s control. In short, breaking free of Beijing’s rare earth dominance will require an urgent, realistic, and unified policy push on a scale unprecedented in the critical minerals sector. And this means the pairing of allied cooperation with a comprehensive industrial strategy to ensure these indispensable materials remain available, securing the industries of tomorrow. 

Unilateral or coercive actions against long-standing allies risk fracturing the very coalitions Rare Earth Exchanges argues must be reinforced. Such divisions would not constrain China’s advance; they would accelerate it, weakening collective leverage precisely when coordination matters most.

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