US launches plan to reduce reliance on China for critical minerals
China currently leads in the mining and processing of many of these critical minerals, including rare earths.
The United States has unveiled a new initiative to form a trade zone for critical minerals, aiming to reduce global dependence on China, which dominates the supply of materials essential for products ranging from smartphones to weapons.
On Wednesday, the State Department hosted the first Critical Minerals Ministerial, attended by representatives from the UK, European Union, Japan, India, South Korea, Australia, and the Democratic Republic of Congo. Delegates discussed access to key minerals used in manufacturing electric vehicle batteries, computer chips, and other high-tech applications.
China currently leads in the mining and processing of many of these critical minerals, including rare earths. Although US officials did not explicitly name China, Vice President JD Vance referred to the "foreign supply" of minerals affecting global markets, making it difficult for other nations with mineral deposits to secure funding for production.
Keep updated, follow The Business Standard's Google news channel
The US plans to use tariffs to prevent critical mineral prices from falling too low, which could discourage investment, according to Vance. David Copley, a special assistant to President Donald Trump, said the US intends to "deploy hundreds of billions of dollars into the mining sector" to jumpstart projects. Investments are already underway in companies such as rare earth magnet maker MP Materials and Lithium Americas, a producer of materials vital for rechargeable batteries.
US Trade Representative Jamieson Greer said the US, Japan, and the European Commission are coordinating trade policies to collectively safeguard access to critical minerals. Ahead of the meeting, a spokesperson for the Chinese Foreign Ministry called for adherence to market principles and international trade rules, urging countries to strengthen communication and dialogue.
The ministerial is part of broader US efforts to counter China's leverage over the critical minerals industry, including the recent creation of a $12 billion reserve called "Project Vault," announced by Trump on Monday. Industry experts welcomed the move, highlighting the importance of securing reliable domestic and allied supplies.
The ministerial coincided with a phone call between Trump and Chinese President Xi Jinping, described by the US president as "very positive." Analysts note that while China eased some recent export curbs on rare earths, its dominance remains a strategic tool in trade negotiations with Washington.
With inputs from BBC
