• The G7 is drafting an action plan to reduce reliance on Chinese rare earths, targeting no more than 60% market share.
  • Measures under consideration include price floors, joint procurement, and accelerated investment in non-Chinese mining and processing.
  • The initiative could reshape global rare earth markets, potentially creating a bifurcated supply chain.

G7 pushes for rare earth diversification

The Group of Seven is finalizing a plan to ensure China supplies no more than 60% of global rare earths, according to people familiar with the matter. The move marks a significant escalation in Western efforts to de-risk critical mineral supply chains, with policymakers exploring mechanisms such as minimum pricing for non-Chinese production and joint procurement among allies.

China currently dominates the rare earth market, accounting for roughly 60% of mining and over 90% of processing capacity for key materials like neodymium magnets used in EVs and wind turbines. The G7's target, still under negotiation, would require a massive ramp-up of capacity in Australia, the US, Canada, and other partner countries.

"We're looking at a combination of sticks and carrots — price floors to make new projects viable, streamlined permitting, and coordinated purchasing to create demand certainty," said a senior G7 official involved in the talks. The official spoke on condition of anonymity because the discussions are private.

Market impact and geopolitical tensions

The plan, expected to be formalized in the coming months, could fragment global rare earth markets. A higher-cost Western supply chain may emerge alongside China's dominant low-cost system, driving up prices for end-users in electronics and defense. Analysts warn that the move could provoke retaliation from Beijing, which has previously used export controls on rare earths as a geopolitical tool.

"If the G7 tries to impose price floors, China could respond by flooding the market or cutting off supply entirely," said Jane Zhang, an analyst at a major consulting firm. "The risk of a trade war in critical minerals is real."

Next steps

G7 finance ministers are slated to discuss the proposal at their next meeting in April. Separately, the US has committed billions under the Inflation Reduction Act to domestic processing, while the EU launched a Critical Raw Materials Act to boost recycling and mine permitting. Industry groups have urged caution, warning that rapid decoupling could disrupt supply chains already strained by EV demand growth.

A previous version of this article incorrectly stated the G7 target as 50%; it is 60%.