US proposes critical minerals trade bloc aimed at countering China

WASHINGTON: US Vice President JD Vance on Wednesday unveiled plans to marshal allies into a preferential trade bloc for critical minerals, proposing coordinated price floors as Washington escalates efforts to loosen China’s grip on materials crucial to advanced manufacturing. China has wielded its chokehold on the processing of many minerals as geo-economic leverage, at times curbing exports, suppressing prices and undercutting other countries’ ability to diversify sources of the materials used to make semiconductors, electric vehicles and advanced weapons.

“We want to eliminate that problem of people flooding into our markets with cheap critical minerals to undercut our domestic manufacturers,” Vance told a gathering of visiting ministers in Washington without mentioning China.

“We will establish reference prices for critical minerals at each stage of production, … and for members of the preferential zone, these reference prices will operate as a floor maintained through adjustable tariffs to uphold pricing integrity,” Vance said.

INDIA, JAPAN AMONG 55 COUNTRIES AT MEETING

President Donald Trump’s administration has stepped up efforts to secure US supplies of critical minerals after China rattled senior officials and global markets last year by withholding rare earths required by American automakers and other industrial manufacturers. Trump on Monday launched a US strategic stockpile of critical minerals, called Project Vault, backed by $10 billion in seed funding from the US Export-Import Bank and $2 billion in private funding.

Secretary of State Marco Rubio said 55 countries attended the talks in Washington, among them South Korea, India, Thailand, Japan, Germany, Australia, and the Democratic Republic of Congo, all with varying refining or mining capabilities.

The minerals are “heavily concentrated in the hands of one country,” Rubio said, without referencing China, adding that the situation had become a “tool of leverage in geopolitics.”

MINERAL COMPANY SHARES DROP

A multi-country effort to establish price floors of critical minerals is the Trump administration’s latest move to exert control over private business. The White House has taken stakes in several mineral companies as well as chipmaker Intel and has negotiated deals with drugmakers for lower prices.

Shares of mineral companies fell on news of the trade bloc. MP Materials lost 2.8 percent, Critical Metals dropped 7.7 percent, NioCorp Developments was down 2.8 percent, and USA Rare Earth lost 6.6% in morning trading in New York.

By guaranteeing minimum prices through coordinated trade rules, Washington hopes to unlock private investment in mining and processing projects that have struggled to compete with cheaper Chinese supply.