Executive Summary
This text analyzes the practical challenges of G7 cooperation to reduce dependence on critical minerals and permanent magnets supplied by non-G7 countries, especially China. Although the G7 has set diversification targets and created a coordination platform with the IEA, implementation faces significant obstacles. These include the difficulty of coordinating incentives for suppliers and manufacturers, the fiscal costs of a possible price floor, delays in developing infrastructure outside the G7, and the limited inclusion of producer countries in decision-making. In this context, China maintains a strategic advantage.
Introduction
At their last meeting in June 2026, the Group of Seven (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States, together with the European Union) agreed to adopt a measurable supply chain target to reduce dependence on rare earths and permanent magnets supplied by China and other non-member countries. The target is to reduce dependence on all non-G7 country suppliers of rare earths and permanent magnets to below 60% by 2030 and, in the long term, to reduce this percentage to 50% (Baskaran and Schwartz, 2026). In addition, the group also stated that it will set up a platform in partnership with the International Energy Agency (IEA) for information sharing, policy coordination, crisis response, and risk monitoring (Payne, 2026).
This text aims to discuss the possible difficulties for the practical implementation of cooperation among G7 countries in the field of critical minerals. The demand for copper, lithium, nickel, cobalt, and rare earth material will likely triple by 2030, meaning the advancement of this initiative by G7 leaders is fundamental to maintaining the resilience of supply chains in the critical economic and military sectors in said countries (Boyer et al., 2026). However, the expected practical results depend on advanced international cooperation among states. In this context, China finds itself in an advantageous position, given that it holds the largest rare earth reserves in the world and does not require such robust cooperation with other countries to supply its industry with these inputs (IEA, 2025).
Discussion
One of the main obstacles to establishing an alternative critical minerals supply chain is the need for member governments to coordinate incentives for both suppliers and manufacturers. An illustration of this difficulty on the suppliers’ side is the discussion regarding the imposition of a price floor. Although a price floor would offer greater predictability to suppliers, encouraging investment in critical mineral extraction, such a measure would require governments to bear the compensation costs necessary to maintain the policy. Actors such as the United Kingdom and Australia have shown reluctance to get involved, as they face growing fiscal pressures of their own (Baskaran and Schwartz, 2026). This reluctance makes it harder for the coalition to move forward, since the policy only works if participating governments agree to share the costs attached to it.
Moreover, demand-side incentives are not sufficient by themselves, as manufacturers also need reasons to integrate this new supply chain. Although the initiative seeks to stimulate demand for responsibly produced materials in order to diversify supply chains, it does not include proposals to ensure that the quality and preferences required by manufacturers are met. Thus, G7’s current measures have not been sufficient to make manufacturers move away from suppliers that offer lower risk, lower prices, and greater convenience (Moerenhout and Wulf, 2026). Without credible guarantees for manufacturers, diversification targets are unlikely to translate into a real shift in supply chains.
The construction of a rare earth supply chain also requires the development of extraction and refining infrastructure beyond the group’s core members. Although projects supported by government financing across Brazil, Saudi Arabia, and Australia have been announced, the expectation is that these proposals will not reach commercial levels within the next four years (Baskaran and Schwartz, 2026). Moreover, many developing countries that produce these inputs have limited access to the G7 policy-making process, which might reduce adherence to cooperation (Boyer et al., 2026). These constraints suggest that the diversification strategy may advance more slowly than its political targets require.
In this scenario, China presents itself as a competitor that also seeks to gain influence over the use of other countries’ mineral resources. In 2024, China’s overseas mining investments reached an all-time high, as Chinese companies showed themselves willing to pay high prices for strategic mineral assets (Baskaran, 2026). These investments are currently directed mainly toward developing economies, especially countries in Africa and Latin America (Patterson, 2026). In Africa, this strategy has made China the continent’s largest financier of mineral projects through long-term investments in both mining and refining capacity (Nantulya, 2025). China operates within its own coordinated system composed of policy banks, state-owned companies, bureaucrats, and industrial policymakers who work to ensure long-term access to critical minerals is available (Baskaran, 2026). This allows the Chinese government to make decisions more assertively and to align rare earth policies with its own interests.
Conclusion
The attempt by Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Union to reduce dependence on China for critical minerals is strategically important, but its practical implementation faces significant obstacles. The success of this initiative depends on coordinated incentives for suppliers and manufacturers, yet fiscal pressures and divergent preferences make collective action difficult. In addition, current measures do not fully address manufacturers’ concerns regarding quality, cost, risk, and convenience. The challenge is further complicated by the slow development of extraction and refining infrastructure outside the group’s core economies and by the limited inclusion of developing producer countries in the policy-making process. Meanwhile, China remains in an advantageous position due to its existing reserves, overseas investments, and more centralized coordination between state and industrial actors. Therefore, unless the G7 can align incentives, accelerate infrastructure development, and deepen cooperation with producer countries, its ability to build a resilient alternative to China’s critical minerals supply chain will remain limited.
Bibliography
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