LONDON — The U.K., Canada and the EU are mulling a coordinated response at the G7 level to China’s expansion of export controls on critical minerals at a key meeting at the end of this month.
With Canada due to host G7 ministers in Toronto at the end of October, the allies are seeking to accelerate efforts to diversify away from Beijing’s dominance in the rare-earth sector.
This comes after Beijing last week announced new restrictions on foreign access to rare-earth magnets and the refined metals and alloys needed to make them over national security concerns.
The move immediately raised alarm from the EU and G7 allies over supply chain security for technologies ranging from electric vehicles and wind turbines, to F-35 fighter jets and naval vessels. China mines about 60 percent and processes about 90 percent of the world’s rare-earth metals.
Ministers from the G7 are “putting our shoulders to the task, buckling down and trying to get as many concrete steps taken as we can to create alternatives for the critical minerals that have been put on export restrictions,” Canadian Energy and Natural Resources Minister Tim Hodgson told POLITICO in an interview Thursday at the end of a three-day trip to London.
“We had a meeting with the G7 envoys on critical minerals while I was here, all working towards further development of a coordinated, multilateral approach to dealing with the recent restrictions,” Hodgson said. “We’re working on those as we speak and we’ll hopefully have some announcements by the time we get to the minister’s meeting in Toronto at the end of the month.”
According to one EU official briefed on the G7 discussions, the Canadians are working on a term sheet of measures to accelerate stockpiling, activate critical mineral partnerships, and build out mining activities in a more concerted approach.
EU trade chief Maroš Šefčovič this week urged the G7 to respond jointly. Šefčovič is expected to discuss the matter with Chinese Commerce Minister Wang Wentao early next week.
The European Commission is seeking to foster coordinated measures against Beijing’s curbs, two other Commission officials told POLITICO. One of them said the EU executive would launch a study of the impact of the new bans on EU industry early next week.
“It’s coercion. We need to see how we will respond,” said the other Commission official, who like the others cited in the story was granted anonymity to discuss the sensitive discussions.
Codependency risk
China’s export curbs triggered an escalatory threat from President Donald Trump to hit Beijing with 100 percent tariffs. While Washington has since scaled back the confrontation, top U.S. officials are also drawing the consequences of Beijing’s lockdown on critical minerals.
“China’s actions have once again demonstrated the risk of being dependent on them, on rare earths, and for that matter, anything,” Treasury Secretary Scott Bessent said. “If China wants to be an unreliable partner to the world, then the world will have to decouple. The world does not want to decouple.”
Hodgson and Canadian Environment Minister Julie Dabrusin will host their G7 counterparts from top global economies, including the U.S., Japan, Italy, Germany, the U.K. and France, in Toronto from Oct. 30-31.
Beijing’s new restrictions are an “amping up” of curbs on critical minerals China has announced this year, Hodgson said. G7 allies, he added, are working on “a number of actual contracts” with private sector firms that they hope to announce at the Toronto meeting.
The G7 is encouraging international firms and other countries to use financial tools to increase global supplies of critical minerals. “That would include things like stockpiling agreements, that would include things like off-take agreements, that would include things like potentially contract for differences on critical minerals,” Hodgson said.
Ottawa is working to implement these “in real terms” following the June G7 leaders meeting in Canada, where Prime Minister Mark Carney proposed a critical minerals buying group, Hodgson said. “Canada is a potential supplier of many of those critical minerals.”
Securing supply chains of critical minerals is playing an increasingly vital role in geopolitics as China tightens the tap on supplies. The U.K. renewed trade talks with Greenland this month, promising to secure critical minerals supply chains. And in Mumbai last week, Britain’s Keir Starmer and India’s Narendra Modi buckled down to collaborate on downstream processing and research projects to “strengthen and diversify critical mineral supply chains.”
During his stay in London, Hodgson met U.K. Energy Secretary Ed Miliband and Britain’s critical minerals envoy, Industry Minister Chris McDonald.
“We believe that multilateralism is the way to counter non-market activities by certain states,” Hodgson said, advocating for multilateralism in response to China’s crackdown.
“We don’t believe using trade as a tool of state manipulation is in anyone’s interest.”
Graham Lanktree reported from London, Camille Gijs and Bjarke Smith-Meyer from Brussels and Clea Caulcutt from Paris. Doug Palmer and Jacopo Barigazzi contributed reporting.
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