Rare Earth Elements in Spotlight as G7 Moves to Counter China’s Market Leverage

The G-7 country leaders are looking to make a pact during their meeting in Kananaskis, Canada with an aim to establish an "action plan" to diversify sourcing of key metals and support “immediate and scaled investment” in projects, according to a draft document cited by Bloomberg. With no mention of China—the source of nearly 70% of global rare earth output—the draft referred to a “threat to our economies” from current practices in the minerals sector.

The seven economies are working to strengthen supplies of critical minerals while reducing their dependence on China. China accounts for nearly 90% of the world’s processing capacity for magnets, which are used in various sectors such as automobiles, household appliances and clean energy.

China has restricted the exports of seven critical rare earth elements on April 4 in retaliation for US President Donald Trump's announcement of 'Liberation Day' tariffs and mandated a special export license.

According to the news agency Reuters, G7 leaders have provisionally agreed on a strategy aimed at securing critical mineral supply chains and supporting global economic stability. According to sources, the draft communiqué — which still awaits formal approval from Trump — underscores the need for mineral markets to reflect the true costs associated with the responsible mining, processing, and trading of these essential materials.

"We have shared national and economic security interests, which depend on access to resilient critical minerals supply chains governed by market principles,” the draft statement said. “Non-market policies and practices in the critical minerals sector threaten our ability to acquire many critical minerals, including the rare earth elements needed for magnets, that are vital for industrial production,” it added.

The draft statement also acknowledged the need for the economies to work together to increase investment in responsible critical minerals projects. It also emphasised that the immediate and scaled investment is required to secure future supply chains and ensure promising mining and processing projects overcome barriers such as delays in permitting and approvals processes, market manipulation and price volatility.

G7 includes France, the US, the US, Germany, Japan, Italy and Canada. Additionally, the European Union is a "non-enumerated member".

India on Rare Earth

A top government official on Monday told PTI that India is hopeful of a positive outcome from its engagement with China to address issues related to Beijing's export curbs on rare earth magnets, which are mainly used in the auto sector.

China's restrictions on the export of rare earth elements and related magnets are affecting the domestic auto and white goods sectors.

The automobile industry has sought government support in expediting approvals from the Chinese government for importing rare earth magnets used in various applications, including passenger cars.

Over 80% of India’s annual 540-tonne magnet imports come from China. Due to Beijing's export control over critical REEs and magnets–such as samarium, dysprosium and terbium–on grounds of stricter licensing and end‑use declarations, India’s automotive and EV sectors have been scrambling too. Maruti Suzuki, for instance, scaled back the rollout of its e-VITARA from 26,000 to just 8,000 units, while Bajaj Auto issued a stark warning of “a dark cloud on the horizon” for high-performance EV motors. And as per the latest reports, applications of 30 Indian manufacturers of rare earth-related components are still awaiting the green light from Chinese authorities for supplies to resume.