US proposes critical minerals trade bloc aimed at countering China

US Vice President JD Vance on Wednesday unveiled plans to marshal allies into a preferential trade bloc for critical minerals, proposing co-ordinated 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.

AUSTRALIA 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 $US10 billion in seed funding from the US Export-Import Bank and $US2 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."

US, EU AND JAPAN ANNOUNCE CRITICAL MINERAL SUPPLY CHAIN PARTNERSHIP

The US, European Union and Japan announced on Wednesday a strategic partnership to shore up the resilience of supply chains for critical minerals now dominated by China, eyeing a broader trade deal with like-minded partners that could include border-adjusted price floors and price-gap subsidies.

In a joint statement, they said the US and the EU committed to concluding a memorandum of understanding on critical minerals within a tight deadline of 30 days.

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 INTC.O and has negotiated deals with drugmakers for lower prices.

Shares of mineral companies fell on news of the trade bloc. MP Materials MP.N lost 2.8 per cent, Critical Metals CRML.O dropped 7.7 per cent, NioCorp Developments NB.O was down 2.8 per cent, and USA Rare Earth USAR.O lost 6.6 per cent in morning trading in New York.

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

The approach could reshape global supply chains for materials essential to electric vehicles, semi-conductors and defence systems, while raising costs for manufacturers in the short term and escalating trade tensions with Beijing.

"China has long played an important and constructive role in keeping the global industrial and supply chains of critical minerals safe and stable and is willing to continue to make active efforts in this regard," China's embassy in Washington told Reuters when asked about the meeting.

China's expanded export controls on rare earths last year caused production delays and shutdowns for auto manufacturers in Europe and the US, and a China-generated glut of lithium has stalled plans to expand production in the US.

Such dependencies have unnerved Washington and its partners, which have struggled for years to implement policies to stand up durable domestic mining and processing alternatives for lithium, nickel, rare earths and other critical minerals.

Trump, who is expected to visit China in April, posted on Truth Social that he had an "excellent" call with Chinese President Xi Jinping on Wednesday morning to discuss a range of trade and security issues from soybeans to Iran, but he made no mention of minerals.

China's leverage over critical minerals was on full display in October when Trump agreed to trim tariffs on Chinese goods in exchange for Beijing's pledge to hold off on stricter restrictions on rare earths exports.

Wednesday's gathering underscores a broader US push to work with partners to counter China's dominance in the sector by coordinating policy tools at a time when Trump has angered allies with his sweeping "America First" tariff policies.

"I think this is a recognition by the United States that it must act in concert with others to reduce its vulnerability in areas where China has supply dominance," said Scott Kennedy, who leads the Chinese business and economics program at the Centre for Strategic and International Studies in Washington.

US Trade Representative Jamieson Greer was set to provide details on the price floor later on Wednesday to meeting participants.

Interior Secretary Doug Burgum said on Tuesday that 11 more countries would be named to a critical minerals trade club this week, joining the US, Australia, Japan, South Korea, Saudi Arabia and Thailand.

He said 20 more countries showed "strong interest" in joining the coalition.

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