Critical Minerals: A Global Meeting in the Making
A significant gathering is on the horizon, focusing on the world's critical minerals. The Group of Seven (G7) finance ministers, along with representatives from Australia and potentially India, are set to convene in Washington. This meeting, hosted by Treasury Secretary Scott Bessent, aims to tackle the pressing issue of securing supply chains for these vital resources.
Background and Context
The push for this meeting began after last summer's G7 summit. It gained momentum with a virtual meeting in December. However, the full list of invited countries remains unclear.
The G7 nations, including the United States, the United Kingdom, Japan, France, Germany, Italy, and Canada, along with the European Union, heavily rely on rare earth supplies from China.
Australia's Strategic Moves
Australia has already taken steps to counter China's dominance. In October, it signed an agreement with the U.S., including an $8.5 billion project pipeline. This agreement leverages Australia's proposed strategic reserve, which will supply metals like rare earths and lithium. These minerals are crucial for:
- Defense technologies
- Semiconductors
- Renewable energy components
- Batteries
- Refining processes
China's Dominance and Western Concerns
China's control over the critical minerals supply chain is substantial. It refines between 47% and 87% of copper, lithium, cobalt, graphite, and rare earths, according to the International Energy Agency. Western countries have been working to reduce their dependence on China's critical minerals, especially given China's strict export controls.
Current Tensions and Implications
This meeting comes at a tense time. Reports indicate that China has started restricting exports to Japanese companies and banning exports of dual-use items to the Japanese military. Despite this, Bessent noted that China is still honoring its commitments to purchase U.S. soybeans and ship critical minerals to U.S. firms.
