The Group of Seven (G7) countries have agreed that no single nation should supply more than 60% of their rare earth element imports by 2030. This agreement is part of efforts to reduce the G7 nations’ dependence on China, sources familiar with the discussions reported.
During their summit in Évian, France, this week, G7 leaders discussed plans to implement mandatory quotas for companies in certain industrial sectors. This likely hinted at the need for defense manufacturers to reduce their reliance on China. The G7 leaders also committed to creating a platform to coordinate efforts to increase supplies through recycling and new mining projects, and they promised to set specific targets for other critical minerals by the end of the year.
The plan regarding critical minerals was one of the issues on which leaders were able to reach a complete agreement, according to one G7 official. Another official noted that all G7 members are united in the need to diversify suppliers of critical minerals to be less vulnerable to disruptions. German Chancellor Friedrich Merz told reporters in Évian: “We agreed to work even more closely together on critical raw materials in various formats” and added: “We had very in-depth discussions with our guests about how we can diversify”.
Challenges and Diversification Strategies
The deadline of 2030 for diversifying supplies of rare earth elements is likely to prove ambitious. Many potential developers are delaying projects due to funding constraints, regulatory hurdles, social resistance, and technical difficulties. One official stated that it is unlikely countries will succeed without establishing quotas for at least some sectors, such as defense.
China imposed sweeping export controls last year on most critical minerals and rare earth elements, threatening to halt production lines worldwide. These measures highlighted for officials the influence that Beijing has gained due to its near-monopoly on supply.
The need to diversify away from China is familiar to Japan. This year, China enacted a broad ban on products that could be used in both civilian and military equipment following a dispute over Taiwan. In 2010, Japan faced an export ban on critical minerals after a maritime border dispute, prompting long-term efforts by the country to reduce its dependence on China for rare earth elements. However, Japan still sources about 75% of its rare earth element imports from its neighbor.
China’s Dominance and the Complexity of Alternatives
Most critical mineral markets are small, and individual projects can significantly increase global supplies. However, scaling up production across all critical mineral markets dominated by China will require vast amounts of capital and technical expertise. Mining and processing rare earth elements are environmentally harmful, expensive, and labor-intensive activities, and establishing alternative supply chains could take years.
A report from the International Energy Agency (IEA) for 2025 found that China controlled about 70% of the processing market for most critical minerals. For some specific substances, China’s dominance in processing is even higher: the country produces 85% of processed cobalt and 99% of primary gallium, according to the same IEA report.