The G7’s New Strategy to Challenge Chinese Dominance

On June 17 in Evian, in response to an increasingly perceived necessity, the G7 established the Critical Minerals Resilience and Production Alliance, adding itself to a plethora of non-binding bilateral and multilateral agreements, including the G7’s own Critical Minerals Action Plan 2025. The central element concerns the Cooperation Platform supported by the International Energy Agency (IEA) and the OECD, the result of a compromise between France’s proposal for a permanent undersecretary and the United States’ counter-proposal to utilize the DARPA’s OPEN database from the Defense Advanced Research Projects Agency. The objective of the agreement is clear: to strengthen the midstream and downstream phases of value chains, primarily for rare earths and permanent magnets, reducing dependence on them to under 60% by 2030.

In an attempt to revive industrial capacity, this new agreement risks, however, maintaining existing structural weaknesses without resolving them, and appearing more as a declaration of intent and political alignment than as a proposal for effective production targets or investment schemes. It suffices to consider that since 2021, over 70 agreements and regulatory frameworks on critical minerals have been signed globally, yet only 6 are binding. The latter are primarily attributable to the United States, which has reached agreements with Argentina, Ukraine, the Democratic Republic of Congo, and Cambodia, and to a lesser extent the EU, which has ratified one with Chile and one with Indonesia. This creates a dense network of collaboration frameworks that overlap with one another and largely exclude the participation of resource-holding countries, especially those on the African continent, which holds 30% of global critical mineral reserves.

Although prioritizing the intermediate segment of the chain (refining, separation, and recycling) allows for a more immediate collective impact, it is necessary to account for the upstream phase, as in the current state of affairs, geographic diversification would not guarantee supply chain security and resilience. Extraction, in particular, though geographically less concentrated due to natural resource distribution, remains indirectly controlled by Beijing through private companies operating in countries with weaker legislation. Therefore, although China is not itself the leading producer for all critical raw materials, since these are not directly extracted on its territory, it consolidates control through ownership of operating companies, a mechanism that the G7 agreement, by focusing on the midstream, does not address.

For that matter, the G7 looks at the intermediate phases of the chain, which present explicitly higher geographic concentration. Currently, China holds 60-85% of the production of strategic raw materials in the clean energy and defense sectors, controlling over 70% of global trade in lithium, cobalt, graphite, and rare earths, as well as elements essential for batteries and permanent magnets.

This lack of communication with producing countries, moreover, undermines the efficiency of the proposed new standards for traceability and transparency, and the market regulation mechanisms. The latter, indeed, collide with new local content policies or export restrictions that producers adopt to capitalize not only on extraction but also on intermediate processing. For instance, Zimbabwe imposed a ban on lithium concentrate exports beginning in January 2027, thereby permitting only the trade of lithium sulfates and higher-value products.

To the absence of direct dialogue with these countries, is added a drastic reduction in Official Development Assistance (ODA) reported by OECD 2025 data, with a 23,1% decline from G7 countries. In this way, the imposition of new due diligence and traceability standards risks further hindering the creation of an alternative value chain, as it fails to provide producers with the necessary financing to develop technical capabilities to implement these new regulations.

In this context, the G7 Minerals Alliance represents an important but structurally insufficient attempt to challenge Beijing’s dominance, as it is built on the idea of redesigning critical chains without the producer countries, a fundamental premise that compromises its success. Therefore, a more efficient approach should fully recognize the bargaining power of supplier countries, include them as protagonists in designing value chains, and combine binding commitments with actual investments that also serve the economic interests of these states. By failing to recognize that part of Beijing’s success lies in its capacity to engage with these actors as economic partners, offering them benefits in exchange for resources, the G7 may find its ability to build a credible alternative limited, leaving Chinese systemic control over critical chains intact.