Efforts by the Trump administration to build a Western alliance for critical minerals are encountering resistance from both key allies and parts of the mining sector, complicating Washington’s plans to reduce dependence on Chinese supply chains.

The initiative, first proposed by US Vice President JD Vance earlier this year, is designed to strengthen Western access to minerals essential for advanced technologies, including semiconductors, batteries, defence systems and artificial intelligence infrastructure.

For years, China has dominated global production and processing of many critical minerals, often supplying them at prices Western competitors argue are unsustainable. US officials contend that this pricing environment has discouraged investment elsewhere, leaving many countries dependent on Chinese-controlled supply chains.

To counter that dominance, Washington has floated a range of measures, including subsidies, guaranteed purchases, price support mechanisms and tariffs aimed at encouraging production among partner countries.

Disagreements Over Pricing

However, discussions among G7 nations have revealed significant differences over how such a system should operate.

According to diplomatic sources, several allies have raised concerns about proposals that would effectively establish supported prices for critical minerals. Questions remain over who would fund the scheme, how financial support would be distributed across supply chains and what oversight mechanisms would be required.

Particular scrutiny has focused on a pricing model developed through the Pentagon’s Defence Advanced Research Projects Agency (DARPA). The artificial intelligence-based system, known as OPEN, is intended to estimate fair market prices by taking production costs into account while excluding what Washington sees as distortions caused by Chinese market practices.

European officials have reportedly expressed reservations about relying on a US-controlled model to determine pricing, arguing that such an approach could leave too much influence in American hands.

Diverging Visions Among Allies

The negotiations have also exposed broader disagreements over how the proposed alliance should be organised.

France and Canada are understood to favour a multilateral framework operating under the G7 umbrella, while the United States has increasingly shifted towards pursuing bilateral agreements with individual partners before potentially expanding the arrangement.

At the same time, Washington has shown little enthusiasm for proposals to create a permanent international body within organisations such as the OECD or the International Energy Agency to coordinate critical minerals policy.

The differing approaches highlight the challenge of building a unified response to China’s dominance while balancing national interests and industrial priorities.

Bilateral Deals Under Consideration

Despite the disagreements, discussions are continuing.

US Trade Representative Jamieson Greer has indicated that Washington wants to move beyond broad policy discussions and establish formal agreements with key partners. Sources familiar with the talks say draft proposals could be presented to both Japan and the European Union before the end of June.

The first agreements are expected to focus on a small number of strategically important minerals rather than larger commodity markets.

Among the materials under consideration are heavy rare earth elements, antimony, graphite and tungsten all resources that have faced Chinese export restrictions or are considered critical for national security and industrial development.

Mining Sector Not United

Industry responses have been similarly mixed.

While many companies support efforts to diversify supply chains away from China, there is little consensus on how governments should intervene in mineral markets.

Submissions from mining companies, refiners and manufacturers to the US government reveal support for targeted action on critical minerals, particularly those used in advanced technology and defence sectors. However, several industry groups have warned against extensive price-setting mechanisms, arguing that direct intervention could create market distortions.

Instead, many companies favour tax incentives, investment support and other measures designed to encourage production without fixing prices.

The National Mining Association has urged policymakers to prioritise incentive-based approaches, arguing that financial support and regulatory reforms would be more effective than government-directed pricing systems.

A Complex Challenge

Experts say the debate illustrates the difficulties Western governments face as they attempt to rebuild supply chains outside China.

Critical minerals markets remain opaque, with pricing often linked to Chinese benchmarks and limited transparency. Developing alternative supply chains requires not only new mines but also investment in processing facilities, refining capacity and downstream manufacturing.

As G7 leaders gather in France this week, critical minerals are expected to remain a central topic of discussion. The outcome of those talks could play a significant role in determining how Western countries seek to secure access to strategic resources and reduce their reliance on China in the years ahead.

(with inputs from Reuters)