G7 forms alliance on critical minerals to challenge China's dominance

Thursday 30 October 2025 - 16:50

By: Dakir Madiha

G7 forms alliance on critical minerals to challenge China's dominance

The Group of Seven nations has unveiled a landmark alliance aimed at bolstering the production of critical minerals, a move described by Canadian Energy Minister Tim Hodgson as a pivotal shift in efforts to lessen Western reliance on China's grip over resources vital for modern technology.

Revealed at the G7 Energy and Environment Ministers' meeting in Toronto, this initiative stands as the most tangible step yet by industrialized democracies to address Beijing's hold on roughly 60 percent of global critical minerals extraction and 90 percent of their processing. The announcement aligns with a separate U.S.-China agreement reached on Thursday in South Korea, where President Donald Trump and President Xi Jinping agreed to postpone China's recent export curbs on rare earth materials by one year.

Strategic response to Chinese market manipulation

China's influence extends far beyond raw extraction, dominating 95 percent of rare earth magnet production and serving as the sole manufacturer for certain specialized magnets used in electric vehicles. Beijing accounts for about 70 percent of rare earth element mining and 90 percent of global processing, according to the Center for Strategic and International Studies.

The G7 alliance will introduce firm purchase agreements, price support mechanisms, and stockpiling pacts to secure supplies for advanced manufacturing and defense applications. "What you'll see on Friday is a series of concrete announcements that demonstrate the power of a collaborative approach to safeguarding supply chains and energy resources," Hodgson stated ahead of the reveal.

Abigail Hunter, executive director of the Washington-based Center for Critical Minerals Strategy, emphasized the pressing need for such action. "For decades, we've faced a competitor that has systematically distorted free markets, deployed industrial subsidies, created overcapacities, and undermined fair trade," she remarked.

Supply chain traceability measures target vulnerabilities

The alliance prioritizes building traceability systems to monitor raw materials from mining to refining, ensuring suppliers adhere to global market standards rather than Beijing's state-driven model. Hunter pointed out that opaque Chinese-controlled firms permeate the supply chain, which the G7 aims to sideline through enhanced transparency policies.

China's latest export controls, announced on October 9, expanded restrictions to 12 of the 17 rare earth elements and introduced a "direct foreign product rule" requiring Chinese government approval for exports of magnets containing even trace amounts of Chinese materials. These measures take effect on December 1, granting Beijing leverage over global technology supply chains, from semiconductors to defense systems.

The G7's countermeasures come as Tae-Yoon Kim, head of the critical minerals division at the International Energy Agency, warned that the heavy concentration of critical minerals refining in one country poses economic and national security risks akin to the 1970s oil shocks. Experts caution, however, that dismantling China's dominance will demand sustained commitment over at least a decade.