Efficiency Strategies for Rare Earths: G7 and EU Discuss Price Floors and Export Taxes

The G7 member states and the European Union are considering the introduction of price floors to promote the production of rare earths, as well as the imposition of export taxes on certain Chinese goods to stimulate investment. These measures are seen as a response to China's strategic export controls, which surprisingly implemented restrictions both on the materials themselves and on related magnet products in April. Rare earth metals are essential for the manufacture of modern technologies such as mobile phones, cars, and highly technological weapon systems. The raw material market is heavily reliant on China, the world's leading producer. Following the recent production stoppages of European automobile manufacturers, China partially accommodated European companies; however, licensing bottlenecks still exist. To reduce dependence on China, the G7 countries – except for Japan – have come together to present a so-called 'Critical Minerals Action Plan' in June. Technical delegations recently met in Chicago to refine details. Discussions revolve around stricter regulations on foreign investments and possible geographical restrictions to limit foreign sourcing. Additionally, a new type of carbon tax is being considered, which would relate to the share of non-renewable energy in Chinese production. Moreover, price floors are being discussed, supported by government subsidies, similar to those recently introduced by the United States. Australia is also considering implementing such measures. Canada is open to the idea of price floors but has not made a definitive commitment. The EU is examining various strategies, including central stockpiles and cooperative agreements within the G7. Meanwhile, the EU has raised the possibility of creating joint stockpiles for rare earths and strategic materials, similar to those for oil and gas, to address future shortages. Official statements from Canada and the USA are still pending.