U.S. Looks for Critical Mineral Partnership with UK, Japan to Curb China’s Dominance

The United States is seeking pacts with Britain, Japan and the European Union that would focus on critical mineral supply chains, in a bid to curb China’s dominance in the market. Washington is looking for a “critical minerals buyers club” with allies including the G7 and the EU to reduce reliance on China, as their efforts to build out renewable energy pacts resume. So-called critical minerals, including rare earth elements and battery metals, have come into the strategic spotlight in recent years because of their roles in energy transition technologies, such as electric vehicles, as well as defense electronics. The Western governments have been particularly concerned over China’s influence in the sector, both in terms of having supplies within its borders and its moves to lock up agreements with other producers, potentially cutting off U.S. access in the event of a crisis with Beijing.

The deals, while aimed at China, could also make the countries eligible for benefits from the Inflation Reduction Act, soothing a key irritant over industrial incentives.

The development adds Japan and the UK to the list of countries where the U.S. is seeking critical mineral pacts. Washington and Brussels had already been in talks over such a deal.

The possible pacts are part of Washington’s efforts to secure supply chains of critical minerals, including through a “Minerals Security Partnership” that includes the EU, UK and Japan, as well as Australia and South Korea. That group held a meeting earlier this week to discuss mining, processing, and recycling of critical minerals with representatives of several African nations, the U.S. State Department said.

The move is also part of the Biden Administration’s wider push to shift global supply chains away from China, hampering its clout in key industries and hedging against disruptions, like the pandemic, that would disrupt supply chains or create scarcities.

Part of the joint push is driven by a desire to make sure the U.S. is not reliant on China for critical minerals. It will also mean the U.S. and its allies have access to the inputs needed to meet emission-reductions goals.

Participating countries would be eligible under Section 30D of the Inflation Reduction Act, an incentive aimed at promoting new electric vehicles. A pact that clears the way for benefits under the IRA would help sooth tensions with Europe, which has complained that the provision freezes out American partners. Biden’s administration has responded by pledging cooperation and encouraging European allies to pass their own domestic subsidies.

“This is one of the most promising ways to go forward,” German Economy Minister Habeck said in an interview Monday, referring to a possible agreement on organizing a market for critical minerals.

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