G7 Launches Critical Minerals Plan as China Controls 90% of Rare Earth Processing

The G7 critical minerals statement released at the Évian summit on June 17, 2026 is the most comprehensive attempt yet by wealthy democracies to address a structural vulnerability that took decades to create. China controls 70% of global rare earth mining and approximately 90% of processing capacity. Its April 2025 export controls, which cut heavy rare earth exports by roughly 50%, forced the recognition that Western supply chains for semiconductors, electric vehicles, defense systems, and wind turbines were built on a single point of failure.

## China's Grip: How 30 Years of Dominance Was Built

Rare earth elements are 17 metallic elements including neodymium, dysprosium, terbium, and lanthanum. They are not geologically rare — they exist in significant quantities in Australia, Canada, the US, Brazil, and across Africa. What China built was not control over deposits but control over the processing infrastructure.

Processing rare earths from ore to usable metal and alloy form requires chemical separation plants that are expensive, environmentally demanding, and take 10 to 15 years to permit and build in most Western jurisdictions. China built this processing capacity at scale through the 1990s and 2000s, combining low labor costs, permissive environmental regulation, and significant state subsidies. By 2010, China had approximately 97% of global processing capacity. Competition, new deposits in Australia and elsewhere, and some reduction in Chinese subsidies reduced that share modestly, but it remains at approximately 90% as of 2026.

The specific bottleneck for the technology sector is rare earth permanent magnets, primarily neodymium-iron-boron (NdFeB) magnets. These magnets are inside every electric vehicle motor, every wind turbine generator, every hard disk drive head actuator, every MRI machine, and a significant portion of military precision guidance systems.

## The April and October 2025 Export Controls

China introduced export controls in two waves. The April 2025 wave restricted exports of crucial rare earth elements and magnets, citing national security as justification. The restrictions required export licenses for neodymium, dysprosium, terbium, and gadolinium, as well as NdFeB magnets in finished form.

The impact was immediate. Exports of heavy rare earth materials from China collapsed by nearly 50% from April to June 2025. Aerospace manufacturers in the US and Europe reported lead time extensions of 6 to 18 months for components that previously had 8-week lead times. Defense procurement offices in Germany and the UK flagged critical shortages in precision guidance system components. Semiconductor manufacturers warned that some deposition materials derived from rare earths could face supply constraints within two quarters.

A second wave of export controls came in October 2025. On November 7, 2025, China suspended the October controls for one year until November 10, 2026. The suspension was diplomatic, tied to trade negotiations and possibly to the Iran conflict creating common interests. However, the April controls remain fully in force, and the licensing architecture built around both waves remains intact. China can reinstate the October controls at 30 days notice.

## What the G7 Actually Agreed at Évian

The G7 critical minerals statement commits member nations to several actions. The core commitment is a road map to advance "standards-based markets for critical minerals," including rare earth elements, to be published by end of 2026.

The proposed specific measures include price support mechanisms (effectively price floors to make non-Chinese mining economically viable), subsidies for processing facilities outside China, market standards to encourage quality-assured supply from alternative sources, guaranteed purchase agreements from G7 governments to anchor demand for new supply chains, and stricter screening of Chinese investment in mining assets in third countries.

France pushed hard for a binding critical minerals statement. The US agreed to the principles but resisted specific numerical commitments. The result is a principles-level agreement, not a binding treaty. The road map process, which runs through the remainder of 2026, is where the specific numbers and enforcement mechanisms will be negotiated.

## Australia and India Join the Session

G7 Treasury Secretary Bessent confirmed that Australia and India were invited to participate in the critical minerals working session at Évian. This is significant for two reasons.

Australia holds the world's largest economically extractable rare earth reserves outside China, including the Mount Weld deposit operated by Lynas Rare Earths, which is the only significant rare earth processing facility outside China at scale. The Lynas facility in Malaysia processes Australian ore and ships to the US and Japan. Lynas has been the primary alternative supply chain beneficiary of Chinese export restrictions.

India has significant rare earth deposits along its coastline in monazite sand, primarily containing light rare earths such as cerium and lanthanum. India's processing capacity is limited but growing, and its inclusion in the G7 session signals an attempt to build a broader non-Chinese supply coalition that includes significant developing economies.

## Semiconductor and Defense Manufacturing: Where It Actually Hurts

For the technology sector, the rare earth dependency is most acute in three areas.

Semiconductor manufacturing equipment uses rare earth-derived materials in deposition processes, particularly lanthanum-based oxides in high-k dielectric layers used in advanced logic transistors below 10 nanometers. TSMC, Samsung, and Intel flagged this exposure in Q2 2025 earnings calls. The impact is not immediate fab shutdown — fab-level stockpiles run 6 to 12 months — but extended Chinese restrictions would hit advanced node production by late 2026.

Defense precision guidance systems including guided artillery, anti-drone systems, and cruise missile guidance units require NdFeB magnets in actuators and sensors. NATO countries had stockpile levels calculated for pre-2025 consumption rates. The April controls forced emergency procurement reviews across NATO defense ministries. The UK, France, and Germany all requested emergency licensing exemptions from China in May and June 2025, with mixed success.

Wind turbine generators, which are central to Europe's energy transition plans, each contain approximately 700 kilograms of NdFeB magnets. European wind farm projects scheduled for 2026 and 2027 commissioning reported 4 to 9 month delays in nacelle deliveries due to magnet supply constraints.

## What Alternatives Exist and on What Timeline

The G7's practical problem is that the timeline for alternative supply infrastructure to reach meaningful scale does not match the political urgency created by the 2025 export controls.

Lynas (Australia-Malaysia) is the largest non-Chinese rare earth producer. Its current capacity serves approximately 10% of ex-China demand. Expanding to 25% would require 3 to 5 years of capital investment and permitting.

MP Materials' Mountain Pass facility in California is the US's only operating rare earth mine. It currently ships ore to China for processing. A planned on-site processing facility is scheduled for commissioning in late 2026 or early 2027. Until that facility operates, the US domestic mine does not reduce Chinese processing dependency.

The $6.4 billion mobilized at the 2025 Kananaskis G7 summit across 26 projects is the largest coordinated investment in alternative supply chains to date. However, mining and processing projects in Western jurisdictions take 10 to 15 years from investment to production at scale due to permitting, environmental review, and construction timelines.

## Our Analysis: The Road Map Is a 5-Year Problem With a 10-Year Solution

The G7 critical minerals road map is politically important but practically insufficient to address the 2026 supply crunch. China's April 2025 controls remain in force. The October controls remain suspendable. The $6.4 billion investment program will not produce significant alternative supply before 2029 to 2031.

What the G7 can do in the near term is absorb the current shortfall through stockpiling, demand reduction in non-critical applications, and emergency sharing arrangements between member nations. Japan, which has the most sophisticated rare earth recycling program in the world, has been drawing down urban mining stockpiles. This is a 12 to 18 month buffer, not a structural solution.

For developers building hardware-dependent systems — EV software platforms, precision manufacturing automation, drone fleets, or wind farm management systems — the supplier diversification requirement is real and immediate. The G7 road map signals that price support and guaranteed purchase programs will make non-Chinese supply viable. But the supply will not be there in volume until the early 2030s.

The most important G7 Évian decision for the critical minerals crisis may actually be the inclusion of Australia and India, not the road map itself. Lynas and India's coastal monazite deposits are the near-term supply assets. Integrating them into a G7 purchasing framework within 12 months is achievable. Building new processing capacity in Canada, Germany, or the US is a decade-long project.

See the [G7 Évian summit overview](/blog/g7-evian-france-2026-iran-deal-ukraine-minerals-trump-zelenskyy-ai-governance) and the [global semiconductor market analysis](/blog/global-semiconductor-market-1-5-trillion-2026-nvidia-tsmc-record-revenue) for context on where chips fit in the supply chain picture.

## Key Takeaways

- **China controls 70% of rare earth mining and 90% of processing** — the bottleneck is processing, not deposits, which exist in Australia, Canada, the US, and Africa
- **April 2025 export controls collapsed heavy rare earth exports by ~50%**, hitting aerospace, defense, semiconductor deposition materials, and wind turbine nacelles within two quarters
- **G7 Évian road map commits to "standards-based markets"** including price floors, subsidies, guaranteed purchases, and stricter investment screening, with specific measures due by end 2026
- **Australia and India joined the G7 critical minerals session** — Lynas (Australia) is the only significant non-Chinese processor; India holds significant light rare earth coastal deposits
- **$6.4 billion mobilized across 26 projects** at Kananaskis 2025 will not reach production scale before 2029 to 2031 — the near-term gap is real and managed through stockpiles
- **Semiconductor fab exposure**: advanced node production uses lanthanum-based high-k dielectrics; TSMC, Samsung, Intel have 6 to 12 month stockpile buffers but face constraints by late 2026 if April controls remain

## Sources

- [Newsweek — G7 Launches Action Plan as China Strengthens Grip on Critical Minerals](https://www.newsweek.com/g7-action-plan-china-strengthens-grip-critical-minerals-12080174)
- [Mezha — G7 leaders draft plan to reduce dependence on China for critical minerals](https://mezha.net/eng/bukvy/179f475c_g7_leaders_draft/)
- [Eastern Herald — Germany Sounds Alarm, G7 Scrambles to Escape China's Rare Earth Control](https://easternherald.com/2026/05/19/germany-g7-china-rare-earth-crisis/)
- [Yahoo Finance — Bessent says Australia, India invited to G7 meeting on critical minerals](https://finance.yahoo.com/news/bessent-says-australia-india-invited-002823913.html)
- [Clark Hill — China Hits Pause on Rare-Earth Export Controls and What it Means for Supply Chains](https://www.clarkhill.com/news-events/news/china-hits-pause-on-rare-earth-export-controls-and-what-it-means-for-supply-chains/)