G7 hitting back on rare earth minerals
China unveils sweeping rare earth export controls to protect national security with the intension to tighten access to China-sourced rare earths and technologies. Under the new commerce ministry rules, foreign companies will need Beijing’s approval to export magnets that contain even trace amounts of China-sourced rare earth materials, or that were produced using the country’s extraction methods, refining or magnet-making technology.
The restrictions will for the first time create a Chinese version of the US foreign direct product rule, a measure Washington has used to block semiconductor-related exports to China from third countries. Rare earth minerals and magnets are critical to technologies from smartphones to electric vehicles and fighter jets. Beijing could have complete control over the entire advanced semiconductor supply chain. No chip company with business in China would risk non-compliance with the new rule.
Beijing first introduced rare-earth export restrictions in April in retaliation for tariffs imposed by the Trump administration. The move helped push Washington to the negotiating table, as the shortage of Chinese rare earths began to hit production in the U.S. vehicle supply chain. China controls about 70% of rare earth mining, 90% of separation and processing, and 93% of magnet manufacturing.
The new licensing regime will cover foreign-made rare earth magnets and certain semiconductor materials that by value contain at least 0.1% Chinese-origin heavy rare earths. The news buoyed shares in China’s large state-owned rare earth groups. China Northern Rare Earth’s shares rose 10% in Shanghai while Rising Nonferrous Metals Share stock was up more than 6%.
Beijing’s commerce ministry and customs administration also announced expanded export controls on some battery anodes and on lithium cathodes and precursors, among other materials in the China-dominated global battery supply chain. The controls could also pose headwinds for Korean and Japanese companies dependent on China’s battery supply chain for certain materials, they said.
China’s expanding rare earth controls have forced Washington to roll out significant state support for American and allied countries’ rare earth miners and magnet makers in attempt to break Beijing’s chokehold. The G7 group of advanced economies is also exploring how to build up a non-China supply chain.
The G7’s Rare Earths Action Plan, officially launched as the Critical Minerals Action Plan (CMAP), is a multi-faceted strategy to reduce dependency on China for critical minerals like rare earths. It will take time to implement though. Key measures include forming a Critical Minerals Production Alliance to secure transparent supply chains, mobilizing private and public investment to increase mining and processing outside China, establishing standards for responsible sourcing, and promoting research and innovation. The plan also includes measures like offtake agreements with producers and price stabilization mechanisms.
On October 31, 2025, on the margins of the G7 Energy and Environment Ministers’ Meeting in Toronto, Tim Hodgson, Minister of Energy and Natural Resources, along with G7 and industry partners, announced the first round of strategic projects and measures under the Critical Minerals Production Alliance to accelerate the development and security of critical minerals supply chains. This first round of 26 new investments, partnerships and measures will accelerate and unlock $6.4 billion of critical minerals projects, essential in defense, clean energy, and advanced manufacturing supply chains.
Nouveau Monde Graphite’s Matawinie Mine near Montreal, Quebec, with offtake arrangements with the Government of Canada, Panasonic (Japan), and Traxys (Luxembourg), as well as an investment intention from the Government of Japan. Collectively, these partnerships will support the diversification of global graphite supply chains and reinforce Canada’s position as a leading supplier of critical minerals.
Ucore Rare Metals Inc.’s facility in Kingston, Ontario, with a conditionally approved investment of up to $36.3 million from the Government of Canada, including up to $26.3 million through Natural Resources Canada and $10 million through the Federal Economic Development Agency for Southern Ontario, to scale up a first-of-its-kind commercial processing facility in Kingston, Ontario, dedicated to refining two important rare earth elements, samarium and gadolinium.
Vianode’s synthetic graphite facility in St. Thomas, Ontario, with a letter of interest for up to US$500 million in potential financing from Export Development Canada, a letter of interest from the Canada Infrastructure Bank, and a letter of interest from the German government for the potential support of the project with an export credit guarantee amount of up to US$300 million. The company already has an offtake agreement with GM.
Northern Graphite, the only natural graphite producing company in North America at its Lac des Iles project near Montreal, Quebec, with a letter of intent for an offtake and toll processing agreement with Alkeemia (Italy), a graphite purification pilot plant in Porto Marghera. This arrangement would also support the implementation of Alkeemia’s technology at Northern Graphite’s planned anode facilities in France and Quebec.
UK Export Finance is working closely with its Canadian counterpart, Export Development Canada, and with Natural Resources Canada to explore financial support for critical minerals projects that will help secure future supply chains for the UK and support Canada’s mining sector and high-growth industries.
ENI (Italy) also intends to enter the strategic production and supply chain of critical minerals through investment opportunities in Canadian lithium, graphite, and start‑ups with innovative technologies for refining rare earths and recycling critical materials from spent batteries or production waste. Building off the Greenland Resources and Cogne Acciai Speciali SpA (Italy) Memorandum of Understanding for the long-term supply of molybdenum for steel production, other Italian steel producers are evaluating the project to support the European Union’s goal of security of supply.
Canada and Australia signed a Joint Declaration of Intent on Critical Minerals Cooperation acknowledging the significance of critical minerals for economic and national security of both countries, including for defense applications, the energy transition, clean technology and advanced manufacturing. It also identifies areas for increased cooperation, including in project financing, technology development and deployment, policy and regulatory alignment, information sharing and supply chain resilience.
Rare earths will remain an important card for China in its relations with the U.S., despite the G7’s commitment to challenge Beijing’s dominance of the critical minerals.
The G7 claims that they are serious about reducing market concentration and dependencies, but it seems to be too little and too late for an immediate impact. At this point, China’s controls were due to take effect on November 1 but China suspended them for a year following a summit between Chinese President Xi Jinping and his US counterpart Donald Trump. The G7 has long wanted to break free from the reliance on Chinese rare earths, but in reality, they can’t do it at least not in the short timeframe. It seems clear that China has the upper hand at this point and the G7 countries have a long road ahead to challenge China’s dominance. For the time being, China is in charge and can continue to dominate.