G7, EU Challenge China's Rare Earths Dominance; Canada Seeks Partnerships
China's dominance in the rare earths sector is facing pushback from global powers. The G7 and EU are exploring a price floor for these minerals, while Canada, rich in critical minerals, grapples with internal obstacles. Meanwhile, countries like Canada and the EU seek partnerships to diversify supply chains.
China currently holds a staggering 70% of the market share in mining and 90% in separation and processing of rare earths. To counter this, the G7 countries and the European Union are exploring the possibility of imposing a floor on the price of these minerals. This move aims to challenge China's power in the sector.
Canada, with its vast reserves, officially recognizes 34 critical minerals and metals. Quebec alone accounted for approximately 38% of Canada's critical mineral production in 2022. However, regulatory delays, lack of infrastructure, and lack of coordination between governments pose significant obstacles for Canada in developing this sector. Despite these challenges, Canada, along with other major producers like Brazil, Russia, India, and South Africa, is interested in partnerships to diversify the supply of critical minerals needed for the energy transition. The EU, with limited domestic reserves, is also seeking strategic partnerships with resource-rich countries to secure these materials.
China's influence extends beyond market share. It manipulates prices and imposes export restrictions on these minerals as part of its trade policy. The country maintains a near-monopoly on several key minerals, including rare earths, graphite, gallium, germanium, antimony, and magnesium. In response, the European Union is actively considering collaborating with countries like Canada, Brazil, and Australia to diversify its supply chains for critical minerals.
To fully exploit its production potential, Canada needs new investments of between $30 and $65 billion in upstream mining projects by 2040, requiring the opening of more than 30 new mines during this period. The EU's Critical Raw Materials Act, aiming to make European countries more self-sufficient in raw materials, encourages extraction, processing, and recycling at the national level. As global demand for critical minerals grows, particularly for the energy transition, these partnerships and investments will be crucial in reshaping the global supply chain landscape.
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