G7 Moves to Cap Rare Earth Imports from Single Supplier at 60%, Targeting China's Dominance

The G7 is moving from vague "de-risking" to a concrete goal by proposing a 60% cap on rare earth supplies from any single country, directly targeting China's market dominance.

This policy was triggered by China's 2025 export controls and aligns with existing allied frameworks like the EU's Critical Raw Materials Act, which sets a similar 65% dependency limit.

The 60% cap provides a clear benchmark for investors, aiming to stimulate the financing of new mines and refineries outside of China to build a more resilient global supply chain.

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The G7 nations have recently taken a significant step to reduce their reliance on a single country for critical resources.

At their summit in Evian, France, leaders discussed setting a specific cap to ensure no single supplier—widely understood to be China—provides more than 60% of their rare-earth elements. This move transforms the general policy idea of 'de-risking' into a concrete, measurable target that investors and industries can act on. It’s a clear signal that the world’s leading economies are serious about diversifying their supply chains for minerals essential to everything from electric vehicles to defense technology.

So, what prompted this decisive action? The shift can be traced back through a clear chain of events. First, it was a direct reaction to China's assertive policies. In October 2025, Beijing expanded its export controls on rare earths and related technologies. This action converted a long-term strategic vulnerability for the G7 into an immediate and tangible risk, making it clear that supply could be disrupted for political reasons.

Second, the G7 wasn't starting from scratch; it was building on existing allied policies. The European Union’s 'Critical Raw Materials Act (CRMA)', which came into force in 2024, already established a benchmark to ensure that by 2030, the EU would not be dependent on a single country for more than 65% of any strategic raw material. The G7's proposed 60% cap for rare earths sharpens this principle and harmonizes the approach across major Western economies.

Third, a series of high-level meetings in the months leading up to the summit laid the groundwork. French and EU officials, in particular, championed the idea. They argued that a numeric cap, combined with support mechanisms like price floors and coordinated purchasing, would create a stable and predictable environment needed to attract private investment into new mining and refining projects outside of China.

This policy has real-world implications. To meet the 60% target, the rest of the world would need to add between 36,000 and 60,000 tons of new rare earth production capacity. For the market, this provides a clear roadmap. It gives financiers the confidence to back non-Chinese producers like Australia's Lynas or the USA's MP Materials, potentially boosting their stock values and making investment funds like the REMX ETF more attractive.

In essence, the G7's 60% cap is more than just a political statement. It is a strategic economic lever designed to rebalance global supply chains and foster a more secure and competitive market for the minerals that will power the 21st-century economy.

Rare Earth Elements (REEs): A group of 17 metallic elements crucial for manufacturing high-tech products, including smartphones, magnets for electric motors, and missile guidance systems.
De-risking: A strategy focused on reducing dependency on a single source or country for critical goods and supply chains, without necessarily cutting off ties completely.
Critical Raw Materials Act (CRMA): An EU regulation aimed at securing a diverse and sustainable supply of critical raw materials for Europe's industries by setting targets for domestic capacity and diversification.