The Group of Seven nations (G7) and the European Union are reportedly working together to try to reduce rare earth reliance on China after the country tightened its export controls for key minerals and related refinery technologies on October 9.
Media reports said G7 countries and the EU are considering introducing price floors to guarantee profits for non-Chinese rare earth suppliers.
On October 17, Canada’s Finance Minister François-Philippe Champagne told the media that G7 nations can move “from dependence to resilience” in the rare earth supply chain, as it has the tools and resources to operationalize an alternative pipeline.
EU trade commissioner Maros Sefcovic said last week that the bloc is coordinating with G7 members on a response to China’s export control on rare earths.
At the upcoming G7 Energy and Environment Ministers’ Meeting in Toronto, Canada, on October 30 and 31, member nations are expected to advance their discussions on rare earth security and the proposed system of price floors for non-Chinese suppliers.
The consensus from the G7 Summit in Kananaskis in June, which called for greater coordination on critical mineral supply chains, will serve as a foundation for the Toronto meeting. Officials say the gathering could yield the first concrete framework for coordinated measures to reduce dependency on Chinese exports.
Meanwhile, Australian Prime Minister Anthony Albanese met with US President Donald Trump in Washington on Monday, where the two leaders signed a rare earths agreement making Australia a key supplier to the US critical minerals chain. The deal, signed at the White House, also reaffirmed the Aukus security pact and its shared goal of cutting dependence on China.
Costs for price floors
The price-floor concept already has a real-world precedent in the US.
MP Materials, a US rare earth producer, benefits from a government-backed agreement guaranteeing a minimum price of US$110 per kilogram for neodymium-praseodymium (NdPr) oxide, higher than China’s price of US$88 per kilogram. The premium helps offset higher production costs and signals Washington’s determination to build a self-sustaining rare earth supply chain.
Most Chinese commentators said the West’s price floor strategy will not succeed as China’s dominance is supported by deep investment, economies of scale, flexible environmental protection requirements and comprehensive processing capabilities that competitors cannot easily replicate.
“The G7’s price floor strategy is flawed and could backfire,” says a Hebei-based columnist writing under the pseudonym “Pianist under the Moonlight.” “If the price floor is set too low, no one will invest; if it’s set too high, downstream industries cannot afford it.”
“Artificial price hikes will increase the cost of electric vehicles, wind turbines and consumer electronics, and consumers will ultimately pay the price. The G7 claims to fight inflation while driving up the cost of key materials. This is self-contradictory,” he says.
The writer says German automakers are expected to resist any aggressive price-floor policies, while their lobbying for exemptions or subsidies will eventually break the so-called G7 rare earth alliance.
“Those loudly calling for price floors are starting to back away when they are asked to pay the price,” says Shen Lunxin, a Shanxi-based columnist who specializes in the auto sector. “Mining rare earths requires labor, environmental safeguards and technology. The US couldn’t fully reopen its mines for decades and had to shut them down whenever oil prices surged. Australia, Canada and South Africa also experienced the same and had to rely on Chinese technical know-how.”
He adds that G7 nations should drop costly price-floor plans and work with China to build stable and balanced supply chains.
In 2010, China tightened rare earth exports to Japan, prompting the US, the EU and Japan to file a complaint against Beijing at the World Trade Organization. At the same time, US-based Molycorp restarted the long-closed Mountain Pass mine, while Australia’s Lynas secured Japanese investment to expand production.
However, after China lost the WTO case in 2014 and flooded the market with its rare earth supplies, prices dropped significantly and made global producers suffer heavy losses. Molycorp went bankrupt in 2015, and both Japanese and Australian ventures were left reeling.
A Shandong-based columnist notes that China “fortunately” lost the 2014 lawsuit, so it could gain market share, improve its refining know-how, and secure the power to shape global industry standards.
‘Wolf warrior’ dismissed
China has tried to de-escalate the situation since US President Donald Trump, on October 10, threatened to impose additional 100% tariffs on Chinese goods and cancel an upcoming meeting with Chinese President Xi Jinping.
On Monday, China removed veteran negotiator Li Chenggang, dubbed a “wolf warrior” in diplomacy, from his position as permanent representative to the World Trade Organization. Li was appointed as China’s lead international trade negotiator in April and played a key role in four successive rounds of US-China trade talks.
Li’s removal came after US Commerce Secretary Scott Bessent told the media on October 15 that Li had shown up uninvited in Washington on August 28 and used “very incendiary language,” warning that “China will cause global chaos if the port shipping fees go through.”
Bessent described Li’s remarks as both “disrespectful” and “unhinged.” He said China’s export curbs marked a decisive escalation in global economic tensions, describing the standoff as a defining moment for global trade.
“This is China versus the world,” he added. “We and our allies will neither be commanded nor controlled. We are not going to let a group of bureaucrats in Beijing try to manage the global supply chain.”
“The US has seriously misinterpreted and exaggerated China’s measures, deliberately creating misunderstanding and panic,” He Yongqian, spokesperson of the Chinese Commerce Ministry, said in a media briefing on October 16. “China’s new rare earth export restrictions are a legitimate step under national laws to prevent the illegal use of rare earths in weapons of mass destruction and to better safeguard both China’s and global security.”
She said before announcing the measures, China had informed the US, EU and Japan, and it is maintaining friendly communication to ensure their smooth implementation.
On October 17, Bessent said he expects Trump and Xi to meet in South Korea late this month.
Read: China, US clash in global shipping after chip and tariff wars
Follow Jeff Pao on Twitter at @jeffpao3
