Tue Jan 13 05:41:22 UTC 2026: ### G7 Finance Ministers Meet to Reduce Rare Earths Dependence on China

The Story: Finance Ministers from the G7 nations, along with representatives from Australia, Mexico, South Korea, and India, convened in Washington on January 12, 2026, to address the growing dependence on rare earth minerals sourced from China. The meeting, led by U.S. Treasury Secretary Scott Bessent, focused on strategies to diversify supply chains, potentially including a price floor for rare earths and establishing new partnerships to develop alternative sources. The move comes in response to China’s increasing export controls on these critical minerals, most recently impacting supplies to Japan.

The discussions included short-, medium-, and long-term policies, such as creating markets that respect labor conditions and human rights. Policy tools mentioned included public financial institution support, tax and financial incentives, trade and tariff measures, and minimum price setting. While no joint statement was issued, participants broadly agreed on the urgent need to reduce reliance on China.

Key Points:

  • A meeting of G7 Finance Ministers and other major economies was held in Washington on January 12, 2026, to discuss reducing dependence on rare earth minerals from China.
  • U.S. Treasury Secretary Scott Bessent convened the meeting, emphasizing the need to diversify supply chains.
  • China has imposed strict export controls on rare earths, including recent restrictions on supplies to Japan.
  • Potential solutions discussed included establishing a price floor for rare earths and forming new partnerships to develop alternative supplies.
  • Japanese Finance Minister Satsuki Katayama outlined short-, medium-, and long-term policy approaches to bolster non-Chinese rare earth supplies.
  • German Finance Minister Lars Klingbeil cautioned against an anti-China coalition, advocating for Europe to develop its own raw material supplies.
  • China controls a significant portion of the rare earth mineral refining, ranging from 47% to 87% for copper, lithium, cobalt, graphite, and rare earths.
  • Last week, China banned exports of dual-use items, including some critical minerals, to Japan’s military.

Critical Analysis:

The meeting is a direct response to China’s increasing use of its dominance in rare earth mineral production as a geopolitical tool. The recent export restrictions to Japan, coupled with long-standing concerns about supply chain vulnerabilities, have spurred action among G7 nations and their allies. The discussions about price floors and alternative supply chains indicate a willingness to intervene in the market to counter China’s influence. The historical context of GOP and Democratic lawmakers traveling to Denmark to discuss Greenland, suggests a broader strategy of exploring and securing alternative sources of critical resources outside of China’s sphere of influence.

Key Takeaways:

  • Geopolitical tensions are increasingly influencing global trade and resource management.
  • Western nations are actively seeking to reduce their dependence on China for critical minerals.
  • The development of alternative supply chains for rare earth minerals will require significant investment and international cooperation.
  • The EU recognizes the urgency of developing its own internal resources and recycling capabilities.
  • China’s control of rare earth refining presents a strategic challenge to global economies.

Impact Analysis:

The decisions and strategies emerging from this meeting have the potential to reshape the global rare earth mineral market. The establishment of a price floor, if implemented, could significantly impact the cost of technologies reliant on these minerals, affecting industries from defense to renewable energy. The drive to develop alternative supply chains will likely lead to increased investment in mining and refining operations outside of China, potentially shifting the geopolitical landscape. The EU’s focus on recycling and internal resource development could also foster innovation and economic growth within the bloc. Over the long term, these efforts could reduce China’s leverage in international relations and create a more resilient and diversified global economy.

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