US Critical Minerals Ministerial Raises New Prospects—and Questions—for Developing Producers

The proposal  

The US proposed the creation of a preferential trade zone for critical minerals and invited dozens of countries to join as members of the trading bloc. The proposed mechanism would include price floors enforced primarily through adjustable tariffs, with the stated aim of diversifying supply chains by protecting investment in mining and processing projects from what the US described as market disruptions and unfair competition from China. US Vice President JD Vance and Secretary of State Marco Rubio asserted that price instability currently disincentivizes investments and undermines diversification efforts by producer and consumer countries alike. Their remarks emphasized that the trade bloc would foster diverse and stable supply chains and also guarantee member countries access to critical minerals supplies in case of an emergency. Details about the proposed mechanism remained scant and it is unclear whether the initiative will secure the political and economic buy-in from major producing and consuming countries to move forward.

The proposal came at the Critical Minerals Ministerial in Washington, D.C., where the launch of the Forum on Resource Geostrategic Engagement (FORGE) was announced as the successor to the Minerals Security Partnership. The Republic of Korea is slated to chair FORGE until June. The European Union (EU), Japan and the US committed to “expedite cooperative efforts for a mutually beneficial Partnership” centering on two elements: memoranda of understanding to support mining, refining, processing, and recycling projects, and the development of an action plan to “explore a plurilateral trade initiative” involving coordination on border-adjusted price floors, standards-based markets, price gap subsidies, or offtake-agreements. Similarly, the US and Mexico unveiled a 60-day plan to develop coordinated trade policies, including possible price floors and their integration into a “binding plurilateral agreement” on trade in critical minerals. The US announced bilateral minerals partnerships with Argentina, the Cook Islands, Ecuador, Guinea, Morocco, Paraguay, Peru, the Philippines, the United Arab Emirates, and Uzbekistan. 

These new initiatives continue global jockeying for access to critical minerals. In recent months alone, there have been numerous mining sector partnerships announced by the US, EU, China and the Middle East. Today’s announcements raise the stakes even further, seeking to draw a line in the sand by asking countries to either close ranks and join the proposed trading club or be left out of it. The proposals also raise important questions about how geopolitical approaches to mining partnerships are evolving in the US and beyond, the shifting stakes for low- and middle-income mineral producing countries, and the actions such countries will need to take in order to reach their own mineral development goals in this rapidly changing context. 

Evolving US strategies

Today’s ministerial is the latest step in a series of recent US initiatives to secure access to mineral supply chains.  

Last year, the US administration took equity stakes and provided loans and other support to several companies across the domestic value chain, including a $400 million equity stake, offtake commitments and a price floor guarantee for rare-earths focused MP Materials. It also committed to finance a 49 percent stake in a Saudi Arabian rare earths facility (also involving MP Materials) and agreed $2 billion of investments in Australian mining and processing projects with Australia.    

In December, the US launched the Pax Silica initiative to secure artificial intelligence (AI) supply chains, including critical minerals, through economic and technological alliances. Members include a dozen developed and high-income economies, while the initiative also integrates companies to build partnerships.  

On Monday, the US announced the creation of a critical mineral stockpile worth nearly $12 billion, backed by a $10 billion loan from the US Export-Import Bank and nearly $2 billion in private capital available to private companies. This approach was described today as a core component of the US strategy to strengthen its presence in mineral supply chains, alongside government investment, protecting companies’ investments and returns, and reshaping the US regulatory ecosystem to accelerate mining permitting.

What are the open questions facing developing mineral producing governments?

Ensuring transparency and public oversight

With details still emerging about which countries may commit to exploring participation in the proposed trade bloc, timelines between 30 days and six months have been promised for the development of MOUs and action plans on the mechanism. Ensuring transparency and public engagement on these initial steps and any subsequent agreements will be essential across participating countries.

Previous bilateral efforts have shown that limited transparency and consultation on the terms of mineral partnerships can lead to public opposition that ultimately delays implementation. For example, the US-DRC Strategic Partnership Agreement that was agreed just 8 weeks ago now faces a legal challenge in the DRC Constitutional Court, with a group of Congolese lawyers seeking to terminate the agreement on the grounds that it violates constitutional provisions on sovereignty over natural resources and requirements for parliamentary approval of treaties related to resource exchanges. The large scale of this new plurilateral effort makes transparency and oversight measures even more essential, as citizens in countries considering participation seek to understand the economic terms their governments are signing up to. 

Enabling value addition and regional cooperation

Details of the mechanics of the proposed price floor and tariff system are yet to emerge, including how they will affect existing projects and new investment originating from outside the club. A key question for low- and middle-income producer countries is how this might impact ambitions to move further along the value chain. Even if price floors succeed in increasing investment in mining projects in low- and middle-income club members, it remains unclear how far this would advance downstream development without additional measures to address persistent bottlenecks—such as inadequate energy infrastructure and high financing costs—facing many value-addition projects.  

The potential implications for regional cooperation efforts, which are central to developing regional value chains and increasing bargaining power more broadly, warrant particular attention. For example, if a value-addition facility inside the club purchases minerals at a higher-than-market price, it will likely need to sell its outputs at a premium to remain viable. This could make it harder for non-club members in the region to purchase these products for further downstream manufacturing. Given how difficult regional cooperation has proven in practice, such an initiative could make it even more challenging.

The EU appears to have recognized this risk. Media reports suggest that, ahead of the announcement, the US encouraged some EU member states to sign bilateral deals, but the Commission urged the bloc’s countries to stick together.

As a next step, developing producer countries could draw on regional institutions—such as the African Minerals Development Centre, the African Development Bank, and the African Legal Support Facility in the case of Africa—and other support to strengthen coordination on mineral diplomacy, bolster technical capacity to assess implications, and inform negotiating strategies. 

Incorporating governance and environmental protections

Accelerating permitting is a key pillar of the US strategy to develop domestic mineral production and refining capabilities and will likely be an element of proposed bilateral deals and trade agreements. Civil society has long called for caution about fast-tracking mining permits which can increase the likelihood of overlooking social, environmental, and governance risks in the sector. NRGI analysis has shown that efforts to speed up production by reducing safeguards in mineral licensing and contracting processes can have the opposite effect when production is slowed or stopped entirely by legal proceedings, shutdowns, protests and strikes.

Ensuring strong governance standards and socio-environmental protections will be a critical foundation for building a resilient minerals trade framework. Today’s joint press release signaled that the EU, US and Japan would engage on next steps “in relevant international fora, including the G7,” opening the door for the proposed trading mechanism to incorporate criteria linked to the recent G7 roadmap to promote standards-based markets for critical minerals. The roadmap outlines G7 commitments to developing performance-based criteria for mining sector standards on international labor and human rights, local consultation, rule of law and anti-corruption measures, and environmental protections.

Multilateral and bilateral trade frameworks should incorporate standards like the United Nations Declaration on the Rights of Indigenous Peoples, UN Convention Against Corruption, UN Panel on Critical Energy Transition Minerals Principles to Guide Critical Energy Transition Minerals Towards Equity and Justice, OECD Due Diligence Guidance for Responsible Supply Chains of Minerals, and the Extractive Industries Transparency Initiative.

Negotiating strategically

Open questions remain about the long-term prospects of the scheme. In particular, it is unclear what steps governments will take to give companies sufficient confidence that price floors will be durable enough to justify significantly scaling up investment. Relatedly, there is uncertainty over who would ultimately bear the higher costs: but whether it is final consumers or governments, there are questions of political feasibility, with parallels to the difficulties of convincing consumers to pay a “green premium.” This challenge will persist unless increased investment generates economies of scale and innovation that reduces prices before political pressure mounts.

Governments should therefore treat such a proposal seriously, but soberly. These developments—coming thick and fast—underscore the importance of low- and middle-income mineral producing countries having a targeted government-wide strategy for leveraging minerals for sustainable development to anchor negotiations. Such strategies will need to be iterative, adapting to new opportunities and challenges, but they should nevertheless ensure that countries enter discussions with a clear sense of national priorities and approach.  

Some producer countries have used strategic neutrality to their advantage. The prevalence and scale of global trading blocs in the mineral sector may determine whether or not strategic neutrality remains a viable option. As the pressure to pick a side in the race for minerals intensifies, countries will be well served by ensuring that high governance standards are at the core of any strategy.