G7 declares war on China's grip on critical minerals

G7 unites against Chinese mineral monopoly

At the Evian summit, G7 leaders adopted a joint declaration committing to coordinate efforts to diversify supply chains for critical minerals. The goal is clear: reduce dependence on China, which — according to available industry data — processes approximately 80 percent of the world's critical minerals and around 90 percent of all rare earth elements, according to OilPrice.com.

The declaration covers minerals and metals that are indispensable to three strategically vital sectors: the defense industry, the automotive industry, and clean energy production. G7 nations have also signaled their intention to bring partner countries outside the group into the effort to build new processing and industrial capacity.

An enormous investment need

The backdrop to this initiative is rapidly growing demand pressure. Electrification of the transport sector and the expansion of clean energy require far greater quantities of these raw materials than previous industries. An electric vehicle battery, for example, depends on up to six times as many minerals as a conventional combustion engine.

The figures, drawn from industry research cited by OilPrice.com, underscore that this is not merely geopolitical symbolism. Failure to develop alternative supply chains could, according to estimates, trigger real supply crises in the battery sector as early as this decade.

What the G7 declaration actually contains

The declaration from the Evian summit is concrete on one point: G7 nations will coordinate efforts among themselves and with partner countries to establish the processing and industrial capacity required for diversification. In practice, this means investments in mining infrastructure, processing facilities, and logistics outside China.

There is nonetheless reason to be skeptical about the pace and scale. Similar pledges have been made by Western nations before without producing lasting structural changes in the market. China's head start has been built up over several decades, and replicating that capacity requires time, regulatory will, and long-term financing — factors that have historically proven difficult to sustain in democracies with four-to-five-year electoral cycles.

Partner countries and new supply chains

Among the countries G7 is looking to strengthen cooperation with, resource-rich nations in Latin America and Africa are specifically highlighted. Argentina is one example of a country that has already tripled its mineral exports since 2010. Such nations could potentially fill part of the gap if the right investments and trade agreements fall into place.

Technological solutions for supply chain traceability are also on the agenda. Brendon Grunewald of the Critical Minerals Institute has highlighted increased ESG documentation and traceability requirements as one of the five biggest challenges facing the sector. Initiatives based on blockchain technology, among others, are already being used by players such as IBM and MineHub to trace the origin of cobalt and tantalum.

Relevance for Norway

For Norway, the minerals question is far from abstract. The country holds known deposits of rare earth elements, among others, and is well positioned to contribute to precisely the kind of alternative Western supply chain that G7 is now calling for. Norges Bank and Norwegian industrial policy actors are closely monitoring developments, particularly in light of the link between mineral access and the energy transition that will affect demand for Norwegian oil and gas over the longer term.

Uncertainty and the road ahead

The G7 declaration is, for now, a statement of political intent rather than a binding treaty. Markets are pricing in sustained geopolitical tension in the commodities segment, and with a risk-off environment and a Fear & Greed index of 23 out of 100, overall market sentiment remains cautious. Commodity analysts will be watching closely to see whether the declaration is followed by concrete investment decisions in the months ahead.