US Rallies Allies to Reduce China's Grip on Critical Minerals

Washington prepares a February 4 minerals meeting

The United States is preparing to convene allied foreign ministers on February 4 to seek an agreement on critical minerals, the materials needed for electric vehicles, renewable energy systems, semiconductors and advanced weapons. As of January 18, 2026, Washington's goal is to diversify supplies and strengthen production networks that remain heavily dependent on China.

The scale of that dependence explains the urgency. International Energy Agency data put China's share of refining between 47% and 87% across copper, lithium, cobalt, graphite and rare earths. For rare earths specifically, China accounts for approximately 70% of global mining and 90% of processing capacity. Finding minerals elsewhere is therefore only part of the task. Countries also need facilities that turn raw material into something manufacturers can use.

Beijing's export restrictions on rare earths, temporarily delayed through a trade deal, have accelerated American efforts to build alternatives. Chinese officials have used control over these inputs as bargaining power, while Washington seeks a supply network able to withstand economic pressure and interruptions.

Treasury Secretary Scott Bessent, Secretary of State Marco Rubio and Trade Representative Jamieson Greer are central to the Trump administration's effort. Their challenge is to align countries with different commercial interests, regulations and industrial needs around a shared mineral security strategy.

The February meeting is presented as the most significant coordinated international effort yet to address this dependence. Its stakes reach beyond trade balances: a shortage of a small but essential manufacturing ingredient can interrupt production across an entire industry. The proposed agreement would seek to reshape resource networks for decades, although the terms still have to be worked out among participating governments.

Washington's approach combines domestic mining and processing, government financial support and partnerships abroad. The aim is to create several reliable routes from mineral deposits to finished components, so a disruption involving one supplier does not leave manufacturers without an alternative.

China controls much more than the mines

China's position rests on an industrial network covering mining, processing, refining and manufacturing. A mineral deposit supplies the raw material, but chemical treatment and further manufacturing determine whether that material can become a battery component, a magnet or another usable product.

Decades of state investment and industrial policy helped build that network. Deng Xiaoping captured the strategic importance China attached to rare earths in a 1992 observation:

the Middle East has oil; China has rare earths.

Rare earth deposits exist around the world. China developed the infrastructure and expertise to process them efficiently, often at prices that made entry into the market economically unviable for competitors.

Hayley Channer, a rare earths expert at the United States Studies Centre at the University of Sydney, described how control extends through the production chain:

China has invested in mines and mineral processes over decades and now controls the raw ores and refining, as well as the downstream manufacturing,"

"In this way, it has built end-to-end supply chains.

Beijing has used that position during diplomatic disputes. In 2010, China cut off rare earth exports to Japan amid a territorial dispute in the East China Sea, alerting Japan, the United States and their allies to the risks of depending on Chinese supplies. More recently, China imposed restrictions on critical minerals destined for military applications in Japan.

China also announced broader measures covering products containing even trace amounts of Chinese rare earths or made using Chinese technology. The proposed rules mirror the United States' Foreign Direct Product Rule, extending controls beyond material exported directly from China. Companies worldwide would need licenses for products containing as little as 0.1% Chinese content.

Those requirements could reach far along manufacturing networks. A company obtaining a component from another country could still face a licensing requirement because of the Chinese material or technology used earlier in production. This breadth helps explain why Washington is seeking alternatives across processing and manufacturing, rather than concentrating only on new mines.

Why these materials are called critical

The United States has designated more than 50 elements and substances as critical minerals because of their importance to economic prosperity and national security. They include familiar industrial metals such as copper and lithium, alongside less familiar elements such as neodymium.

Neodymium helps make the powerful magnets used in electric vehicle motors, wind turbines and high performance speakers. The word critical refers to how indispensable a material is, rather than simply how scarce it is. Manufacturing may require only a small amount, yet many applications have no practical substitute.

Lithium-ion batteries power smartphones, electric vehicles and systems that store electricity for power grids. Rare earth magnets support compact motors in electric cars and precision guidance systems in advanced weapons. The F-35 fighter jet incorporates these materials in radar arrays, sonar systems and electronic warfare capabilities.

Computer hard drives, medical imaging devices and catalytic converters also depend on specialized minerals. US automotive executives have warned that interruptions in supply could halt American vehicle production within weeks. A missing ingredient can stop an assembly line even when every larger component is available.

Processing is one of the hardest parts of replacing Chinese supplies. Ore must undergo separation, concentration and chemical treatment before manufacturers can use it. These operations are chemically complex, consume substantial resources and can cause environmental damage.

A rare earth refinery costs approximately $500 million on average. Building one also takes time, adding a financial and technical challenge to the search for deposits. Mining, refining and manufacturing must expand together if an alternative supply network is to deliver finished products reliably.

The US combines investment with permitting changes

The Trump administration is pursuing several domestic measures at once: expanding mining and processing, simplifying permits, offering financial incentives and investing government money directly in producers. Its aim is to make projects commercially viable in markets where prices can swing sharply.

The Department of Defense recently took a 15% stake in US rare earth producer MP Materials for $400 million. The arrangement includes a price floor for key products and an offtake agreement guaranteeing demand. A price floor provides a minimum selling price; an offtake agreement commits a buyer to purchasing production. Together, they give a project greater certainty about future revenue.

The MP Materials partnership provides a model for attracting private capital to projects that might otherwise struggle in volatile commodity markets. Government support addresses both the risk that prices fall and the risk that a new producer cannot find enough customers.

The administration has also opened federal lands to more mineral exploration and moved to simplify permitting. Building a new mine in the United States currently takes an average of 29 years, the second longest timeline in the world. A single project can require as many as 30 permits, including duplicative requirements across federal, state and local authorities.

Permitting reform has support across party lines. Both the Trump and Biden administrations have supported accelerating approvals while maintaining environmental protections. Faster approvals would address one delay, while projects would still need financing, technical expertise and operating facilities.

Washington has signed a minerals deal with Ukraine and is pursuing agreements with countries that have significant reserves but lack processing infrastructure dominated by China. Domestic resources alone cannot meet American demand, making international partnerships part of the strategy from the outset.

Bessent has stressed price floors and forward buying mechanisms, which involve arranging purchases ahead of delivery to give producers more certainty. The Treasury secretary said the United States would pursue these measures:

across a range of industries

That approach extends beyond rare earths. Greer has stressed resilient supply chains and economically viable critical mineral markets built through international cooperation. Financial tools from the Development Finance Corporation, Export-Import Bank and Defense Production Act are intended to support mining and processing projects in friendly countries.

Allies discuss prices, standards and shared supplies

The February 4 gathering follows a January meeting in Washington involving finance ministers from the G7 countries: the United States, Japan, Britain, France, Germany, Italy and Canada. Officials from Australia, Mexico, South Korea and India also participated in discussions on supply chain resilience.

Japanese Finance Minister Satsuki Katayama described the common objective to reporters:

broad agreement on the need to swiftly reduce reliance on China for rare earths

Katayama outlined measures for the short, medium and long term. Her proposals included creating markets based on standards such as respect for working conditions and human rights, alongside support from public financial institutions, tax and financial incentives, trade and tariff measures, quarantine measures and minimum prices.

Katayama said governments needed to commit to putting those proposals into practice:

I stressed the importance of committing to these measures,

European governments face a coordination issue of their own. The United States has encouraged some European Union member states to sign bilateral memorandums of understanding. The European Commission has advised maintaining a united front so the bloc can use its collective bargaining power.

German Finance Minister Lars Klingbeil urged Europe to move faster in developing its own supplies of important raw materials. He rejected passivity in two parts of his warning:

neither complaining nor self-pity helps us"

"we have to become active.

Klingbeil said the G7 discussions included possible price floors for rare earths and partnerships to increase supplies. He cautioned that talks had only begun and many issues remained unresolved.

South Korean Finance Minister Koo Yun-cheol focused on strengthening global value chains through comparative advantage, meaning countries contribute where their resources or industries are best suited. He placed particular attention on recycling critical minerals as a way to make supplies more resilient.

Canada and Australia are important potential partners because both have significant mineral reserves and established mining industries. Under the recent US-Australia Framework for Securing of Supply in the Mining and Processing of Critical Minerals and Rare Earths, the two governments are prepared to take ownership stakes in projects valued at $8.5 billion.

The discussions have developed across several stages:

• 1992: Deng Xiaoping highlighted the strategic value of China's rare earth resources.
• 2010: China cut off rare earth exports to Japan during an East China Sea territorial dispute.
• January 2026: G7 finance ministers and officials from five other countries met in Washington to discuss mineral supply resilience.
• February 4, 2026: Allied foreign ministers are scheduled to meet on a broader agreement to diversify and strengthen critical mineral supplies.

Policy proposals reach beyond rare earths

The Center for Strategic and International Studies has proposed seven measures to strengthen mineral security. They include renewing a Bureau of Mines to coordinate domestic mining development, creating incentives to safeguard US industries and reforming the US International Development Finance Corporation so it can better finance mineral projects.

The recommendations combine domestic production with international partnerships. One proposal calls for adding copper to the Department of the Interior's critical minerals list, where the recommendation describes it as not currently classified as critical. That designation would make copper eligible for existing and future incentives and encourage investment in domestic refining.

US copper consumption reached 1.8 million metric tons in 2022, making the country the world's second largest consumer after China. Copper is essential for infrastructure, clean energy technologies, defense applications, electronics and automotive systems.

The artificial intelligence industry alone could require up to 200,000 metric tons of copper annually between 2025 and 2028 for data center infrastructure. That amount is about 11% of the 1.8 million metric tons the United States consumed in 2022, illustrating the size of a possible new source of demand against an earlier consumption figure.

The Carnegie Endowment for International Peace has advocated a broader metals industrial strategy combining onshoring, or production within the United States, with offshoring through international supply development. Its analysis finds that even under optimistic assumptions, US domestic production would meet projected demand by 2035 only for zinc and molybdenum.

Substantial imports of copper, graphite, lithium, silver, nickel and manganese would still be needed to support industrial expansion and modernization of the electricity grid. The strategy therefore depends on reliable trading partners rather than complete national self sufficiency.

Guaranteed price contracts with miners and processors, modeled on the MP Materials arrangement, could provide certainty while sharing gains when prices rise. Another proposed tool is a contract for difference, which establishes an agreed strike price and uses payments tied to the gap between that price and the market price.

Such contracts seek to keep projects investable while allowing market prices to operate. Blanket tariffs take a different approach and can raise costs for domestic manufacturers buying the materials. The policy choice affects both the companies producing minerals and the industries using them.

Replacing China's production network will take years

Adamas Intelligence estimates that the United States and its allies would need 10 to 15 years to build supply chains with the breadth and depth required for growing demand, provided they maintain policy and investment momentum. The work involves processing and manufacturing networks as well as mines.

The United States imports approximately 10,000 tonnes of rare earth magnets from China annually, while Europe imports more than 25,000 tonnes. Europe's volume is therefore more than two and a half times the US figure. Demand in both regions is projected to grow by multiples over the next decade as electric vehicles, renewable energy and defense applications expand.

Meeting that demand outside China requires mining capacity, processing facilities and manufacturing for magnets and battery components to grow together. A new mine cannot supply a finished magnet without the intervening industrial stages.

Ryan Castilloux, founder and managing director of Adamas Intelligence, warned that China's proposed export controls could make existing disruptions seem like a:

minor inconvenience.

Castilloux's concern is the reach of licensing requirements for products containing traces of Chinese materials or made with Chinese technology. Full implementation could multiply bottlenecks and interruptions on assembly lines. Technical expertise gaps, environmental concerns and capital requirements also constrain the pace of building alternatives.

Ross Chandler, a postdoctoral fellow at Australian National University who studies critical minerals, explained the limits on accelerating complicated industrial projects:

Even with strong political will, the permitting, financing, and technical ramp-up of these complicated projects can't be sped up too much,

Chandler described reducing dependence on China as a:

multi-decade process.

The two assessments reflect the scale of the work ahead. Adamas Intelligence puts a substantial alternative network within a period of 10 to 15 years under sustained support, while Chandler describes the wider effort as extending across decades.

China's restrictions encourage customers to diversify

China's use of export controls has produced mixed results as a diplomatic tool. Following its 2010 curtailment of exports to Japan, the World Trade Organization ruled that the measures violated international trade rules. Beijing withdrew them, while Japan and other countries developed alternative sources.

The latest restrictions are again encouraging major customers to expand their options. The United States, Japan and the European Union are rebuilding domestic refining capacity and deepening supply links with other producers.

East Asia Forum analysts argue that tighter controls have given China's partners with substantial mineral resources stronger incentives to align with Washington and protect their production networks from possible Chinese constraints. Australia illustrates that tension: Prime Minister Anthony Albanese has sought to stabilize economic engagement with China, while his government has deepened critical mineral cooperation with the United States.

Some experts suggest China could benefit from controls based on predictable rules and focused narrowly on legitimate national security concerns, while keeping trade open with trusted partners. Exempting Japan and the European Union from broad restrictions could help sustain economic networks with multiple partners and reduce perceptions that supplies are being used to exert pressure.

Greater predictability could also help China preserve market share as Western countries develop alternatives. Beijing's role as a global supply hub depends partly on customers being confident that they can obtain the materials their factories need.

The February meeting tests a long term commitment

The February 4 ministerial meeting brings together several strands of policy: support for producers, minimum prices, purchasing commitments, faster permits, recycling and investment in allied countries. The immediate task is to turn shared concern about dependence on China into a coordinated agreement.

The US-Australia framework and the MP Materials investment show two routes already being used. One supports projects across national borders; the other combines a government ownership stake with price and demand guarantees for a domestic producer.

Allied governments must still reconcile their interests. European coordination, national regulations, environmental protections and the costs borne by manufacturers all affect how a common minerals policy would work. Klingbeil's account of discussions that have only begun captures the distance between agreeing on the problem and settling the details.

The competition over minerals is part of wider strategic tensions between the United States and China. Reducing dependence would limit Beijing's ability to use supply pressure during future conflicts. Success will require political commitment across multiple administrations, substantial investment and international coordination through the coming decade and beyond.

The Bottom Line

• Allied foreign ministers are scheduled to meet on February 4 to pursue a critical minerals agreement.
• China accounts for approximately 70% of rare earth mining and 90% of processing capacity.
• International Energy Agency figures put China's refining share between 47% and 87% across copper, lithium, cobalt, graphite and rare earths.
• The US strategy combines domestic production, government investment, purchasing support and partnerships abroad.
• The Department of Defense invested $400 million for a 15% stake in MP Materials, with price and demand guarantees.
• The US-Australia framework covers potential government ownership stakes in projects valued at $8.5 billion.
• Adamas Intelligence estimates that substantial alternative supply chains will require 10 to 15 years of sustained policy and investment.
• US and European imports of Chinese rare earth magnets total approximately 10,000 and more than 25,000 tonnes annually, respectively.
• Domestic production alone would still leave the United States needing substantial imports of several industrial metals by 2035.