G7 Allies Forge Binding Rare Earth Price Floors to Counter China’s Monopoly

Japan is spearheading a G7 initiative to establish binding price floors for critical minerals, aiming to dismantle China’s dominance over global rare earth supplies. The proposal, unveiled at the G7 summit in Évian, France, calls for coordinated stockpiling of lithium, nickel, and other strategic resources to shield allies from supply chain disruptions caused by Beijing’s geopolitical maneuvers.

Prime Minister Sanae Takaichi warned at the summit that China’s export controls on dual-use items to Japanese military-linked entities threaten G7 supply chains. She urged multilateral development banks (MDBs) to build resilient mineral supply networks and highlighted active cooperation with the World Bank’s Resilient and Inclusive Supply Chain Enhancement (RISE) Partnership, alongside the Asian and Inter-American Development Banks. G7 leaders also agreed to leverage the International Energy Agency (IEA) as a new market monitoring hub to preempt supply risks.

The alliance’s strategy targets reducing dependence on non-G7 sources of rare earths and permanent magnets to under 60% by 2030. Stockpiling efforts will prioritize lithium and nickel, with Taiwan and the U.S. securing agreements to supply rare earth materials for Japan’s defense sector. A price floor mechanism for critical minerals will ensure stable procurement costs, countering China’s ability to weaponize market prices.

This marks a departure from Japan’s 2010 response, when China’s rare earth embargo forced unilateral investments in overseas projects. Backed by the WTO’s 2014 ruling against China’s export bans, the G7 now pursues binding commitments, including a US$250 million stake in Australia’s Lynas Rare Earths and partnerships with Brazil’s GOIÁS state, which boasts 21 million metric tons of rare earth reserves. Japan-Mordi Development Finance Corp (JOMFDFC) and Sojitz Corp’s joint ventures further anchor supply diversification.

Chinese officials dismissed the G7 plan, with Foreign Ministry spokesperson Lin Jian asserting that Beijing’s export bans aim to curb Japan’s remilitarization and nuclear ambitions. Analysts, however, note the G7’s coordinated approach directly challenges China’s 16-year-old precedent of rare earth coercion, which nearly crippled Japan’s industrial sector after the 2010 Senkaku Island incident.

Despite G7 momentum, challenges persist. Japan’s defense-linked firms, like Shin-Etsu Chemical, are expanding domestic refining capacity, while firms invest in rare earth projects across Australia, Brazil, and Canada. Analysts caution that heavy rare earths like dysprosium and terbium—critical for military applications—remain dominated by China, with new supply chains unlikely to meet demand for years.

Japan’s broader strategy includes a deep-sea mining project in the Pacific, retrieving rare earth-laden sediments from 6,000 meters below the surface. However, technical and commercial hurdles suggest commercial viability remains distant. For now, the G7’s price floor framework and diversified partnerships represent a historic shift in breaking China’s stranglehold on rare earths—a resource pivotal to modern defense and manufacturing.

Read: China Plays Rare-Earth Card on Japan, but Keeps It Subtle

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