At the G7 summit in Évian, France, on June 16, Japanese Prime Minister Sanae Takaichi called on fellow members to adopt a floor price mechanism for rare earths and critical minerals. The proposal is designed to make domestic and allied production economically viable, reducing reliance on China, which dominates global supply chains for these materials.
Takaichi warned that Beijing's export controls—imposed in January on all dual-use items to Japanese military users—threaten to disrupt supply chains across the G7 and beyond. She urged multilateral development banks (MDBs) to channel support to mineral-producing developing countries, and highlighted the World Bank Group's Resilient and Inclusive Supply Chain Enhancement (RISE) Partnership, as well as cooperation with the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB).
G7 leaders agreed to coordinate stockpiling of critical minerals and set a target to reduce dependence on any single non-G7 supplier of rare earths and permanent magnets to below 60% by 2030. Lithium and nickel were designated as pilot metals for initial stockpiling efforts. The International Energy Agency (IEA) will expand its role to monitor markets and flag supply risks through a new coordination platform.
Escalation and Historical Echoes
The current standoff traces back to January, when China banned exports of dual-use items to Japanese military entities, citing Japan's remilitarization drive. The curbs were partly triggered by Takaichi's remarks that any use of force against Taiwan could constitute a survival-threatening situation for Japan—a legal threshold that could activate the country's Self-Defense Forces. Chinese firms have since stopped supplying critical metals to Japanese companies for dual-use purposes, forcing them to pay premiums for alternative sources.
The tactic mirrors a 2010 incident, when China halted rare earth exports to Japan after a collision between a Chinese fishing trawler and Japanese Coast Guard vessels near the disputed Senkaku Islands. At that time, Japan imported about 28,000 metric tons of rare earths annually, roughly 90% from China, leaving its automobile and electronics sectors severely exposed. Japan and Western partners filed a complaint at the World Trade Organization (WTO), which ruled against China's export controls in August 2014.
Japan responded to the 2010 shock by investing in overseas alternatives, including a $250 million stake in Australia's Lynas Rare Earths, which mines ore at Mount Weld in Western Australia and refines it in Malaysia. However, from 2012, China flooded the market with cheap supply, rendering most foreign rare earth projects uneconomical. Molycorp, owner of the Mountain Pass mine in California, filed for bankruptcy in 2015. By 2020, Japan had trimmed China's share of its rare earth imports only to around 60%, leaving Beijing's leverage largely intact.
New Coalition, New Risks
This time, the G7 action plan marks a departure from the earlier era of unilateral responses. Unlike in 2010, when Japan fought alone, the Évian framework enlists a broader coalition with binding supply targets and coordinated stockpiling. Nikkei reported on June 10 that Shin-Etsu Chemical, one of Japan's largest rare earth magnet makers, plans to build a new domestic refinery in Fukui prefecture at a cost of over 35 billion yen ($218 million), with roughly half the funding from government subsidies. A company spokesperson said the refinery would help ensure stable supply but declined further details.
China's Foreign Ministry spokesman Lin Jian reiterated Beijing's position: “In accordance with laws and regulations, China has banned the export of all dual-use items to Japanese military users and for Japan's military use. The aim is to contain Japan's remilitarization and its attempt to possess nuclear weapons.” He accused Japan of “stitching together exclusive groupings against China within the G7” and said such efforts “win no support and are bound to fail.”
Chinese pundits remain skeptical of Japan's prospects. A Hefei-based columnist writing under the pen name “Sea Lion” noted that domestic rare earth prices in Japan tripled after the January curbs. Japan now partners with Canada's Aclara Resources, which has mining projects in Brazil and Chile, but the columnist argued that China's ability to flood the market with cheap supply could again undermine allied projects.
The G7's push for price floors and stockpiling reflects a broader recognition that market mechanisms alone cannot counter China's strategic control over critical minerals. Whether this coalition can sustain the political will and investment needed to break Beijing's grip remains an open question.
