By Michael Martina, Simon Lewis and Jarrett Renshaw
WASHINGTON, Feb 4 (Reuters) – U.S. 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 U.S. 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 U.S. strategic stockpile of critical minerals, called Project Vault, backed by $10 billion in seed funding from the U.S. 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%, Critical Metals dropped 7.7%, NioCorp Developments was down 2.8%, 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.
The approach could reshape global supply chains for materials essential to electric vehicles, semiconductors and defense 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 U.S., and a China-generated glut of lithium has stalled plans to expand production in the U.S.
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 U.S. 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 Center for Strategic and International Studies in Washington.
U.S. 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 U.S., Australia, Japan, South Korea, Saudi Arabia and Thailand. He said 20 more countries showed “strong interest” in joining the coalition.
(Reporting by Michael Martina, Simon Lewis, David Brunnstrom, Jarrett Renshaw in Washington, Julia Payne in Brussels and Robbie Corey-Boulet in Dakar; Additional reporting by Andrea Shalal, Divya Rajagopal; Editing by Humeyra Pamuk, Deepa Babington, Mark Porter, Rod Nickel)
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