G7 leaders will work on setting standards for the critical minerals market, with a focus on labour and environmental standards and anti-corruption measures.Pool/Getty Images
The leaders of the Group of Seven countries have provisionally agreed to work together to rapidly develop global supply chains for critical minerals in an effort to reduce their reliance on China for key industrial inputs.
The G7 countries will establish an “action plan,” with the aim of setting standards for critical minerals markets and providing funding for new mines and downstream processing facilities, according to a draft document seen by The Globe and Mail.
Critical minerals are high on the agenda for the G7 summit in Kananaskis, Alta., and the importance of securing supply is something all the attendees agree on – even as they quarrel over trade and tariffs. The document has not been formally signed by the leaders.
Critical minerals, which include lithium, cobalt, nickel and rare earth elements, are used in a wide range of advanced technologies, ranging from electric vehicles to smartphones to military hardware. Most of the supply for these metals, however, is controlled by Chinese companies and state entities, which own mines around the world and do the lion’s share of processing for many critical minerals in China.
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This concentrated supply chain has been a concern for Western countries for years, and Canada and other G7 countries already have policies aimed at bolstering domestic supply chains.
However, it has become a pressing issue in recent months, after Beijing’s decision to temporarily restrict the export of rare earth elements as part of its trade war with Washington. This caused a panic among car makers and other manufacturers who use industrial magnets made of rare earths.
While China agreed last week to resume rare-earth shipments, the episode has concentrated minds in Washington and other Western capitals.
“We recognize non-market policies and practices in the critical minerals sector threaten our ability to acquire many critical minerals, including the rare earth elements needed for magnets, that are vital for industrial production,” the draft document says, without explicitly naming China.
“We will work together and with partners beyond the G7 to swiftly protect our economic and national security. This will include anticipating critical minerals shortages, coordinating responses to deliberate market disruption, and diversifying and onshoring, where possible, mining, processing, manufacturing, and recycling,” it says.
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As part of the action plan the countries will work on setting standards for the critical minerals market, with a focus on labour and environmental standards and anti-corruption measures. These standards can be wielded to limit market access for certain countries and companies.
The plan also involves boosting financing for mines, processing facilities and infrastructure in friendly developing countries, with capital from export credit agencies and multilateral institutions, such as the World Bank.
Canada is a meaningful producer of some critical minerals – it’s the sixth biggest producer of nickel, supplying around 4.5 per cent of global production, for instance. But many of its abundant critical minerals remain untapped in the ground, and the country has little refining capacity.
“We have a lot of the raw resources here in Canada and elsewhere in parts of the G7, but we have really lost momentum and lost the race to develop the processing capacity and the supply chain to guarantee those for our member countries,” said Matthew Holmes, head of public policy at the Canadian Chamber of Commerce.
Canada stands to benefit from an international effort to develop non-Chinese supplies, he said. And a focus on critical minerals could provide a point for collaboration with the United States as both countries look to establish a new framework for trade and security.
“They recognize Canada has the raw resources but needs to develop the processing so that both economies can benefit from that. The U.S. is already putting millions, if not billions, into our critical mineral space. I think there is the foundation for us to do more there,” Mr. Holmes said.
Alongside critical minerals, the G7 leaders are discussing other industries, including artificial intelligence and quantum computing.
The group will not be releasing a joint communiqué at the end of the summit, to avoid highlighting disagreements over trade and antagonizing U.S. President Donald Trump. Instead, they plan to release several shorter documents focused on specific issues.