US Treasury Secretary Scott Bessent has announced that Australia and India will be invited to participate in a crucial G7 finance ministers meeting focused on critical minerals supply chains. The meeting, hosted by Bessent in Washington, represents a significant step in addressing Western nations' heavy dependence on China for essential minerals used in defense technologies, semiconductors, and renewable energy components.

Meeting Details and Participants

The G7 finance ministers meeting builds upon previous discussions, including a virtual session held in December. Bessent revealed that he had been advocating for a dedicated meeting on critical minerals since the G7 leaders' summit last summer. While Australia's participation has been confirmed, Bessent indicated uncertainty about India's acceptance of the invitation during his interview with Reuters.

China's Market Dominance

The urgency of this meeting stems from China's overwhelming control of the global critical minerals supply chain. According to International Energy Agency data, China dominates the refining of essential minerals across multiple categories. This dominance has created significant vulnerabilities for Western economies and their strategic industries.

These minerals are critical components in defense technologies, semiconductors, renewable energy systems, batteries, and various refining processes, making their secure supply essential for national security and economic stability.

Strategic Partnerships and Agreements

Australia has emerged as a key partner in efforts to diversify critical minerals supply chains. The country signed a significant agreement with the US in October, featuring an ₹71,400 crore ($8.50 billion) project pipeline designed to counter China's market dominance. This partnership leverages Australia's proposed strategic reserve, which will supply vulnerable metals including rare earths and lithium.

Following the US agreement, Australia has reported receiving interest from multiple regions and countries, including Europe, Japan, South Korea, and Singapore, indicating growing international recognition of the need for supply chain diversification.

Recent Developments and Export Restrictions

The timing of Monday's meeting coincides with escalating tensions over critical minerals trade. Recent reports indicate that China has begun implementing restrictions on rare earth exports to Japanese companies, including powerful magnets containing these materials. Additionally, China has banned exports of dual-use items to the Japanese military, demonstrating the strategic weaponization of critical minerals supply chains.

Despite these restrictions affecting other nations, Bessent noted that China continues to fulfill its commitments regarding US soybean purchases and critical mineral shipments to American firms, suggesting a differentiated approach to trade relationships.

G7 Action Plan Implementation

The G7 group, comprising the United States, Britain, Japan, France, Germany, Italy, Canada, and the European Union, established an action plan in June aimed at securing supply chains and strengthening their economies. Most G7 members face significant dependence on Chinese rare earth supplies, making the development of alternative sources a strategic priority for the alliance.

The inclusion of Australia and India in these discussions reflects the G7's recognition that addressing critical minerals supply chain vulnerabilities requires broader international cooperation beyond the traditional advanced economy grouping.

India has been invited to participate in a special meeting of Group of Seven (G7) finance ministers focused on critical minerals, according to U.S. Treasury Secretary Scott Bessent. The meeting is scheduled to take place in Washington on Monday and will include Australia and several other countries outside the G7 framework.

Meeting Background and Objectives

Bessent revealed that he had been advocating for a focused discussion on critical minerals since last summer's G7 leaders' summit. While finance ministers had already conducted a virtual meeting on the subject in December, the Washington gathering is designed to deepen coordination as supply chain risks continue to intensify.

The U.S. Treasury Secretary confirmed India's invitation but noted uncertainty about whether New Delhi had confirmed its participation. The identities of other non-G7 countries receiving invitations remain unclear.

Critical Minerals Challenge

The renewed urgency surrounding critical minerals stems from the G7's heavy dependence on China for essential materials. These include rare earths, lithium, cobalt, graphite, and copper—all crucial inputs for defense technologies, semiconductors, renewable energy equipment, and batteries.

Last June, G7 leaders agreed on an action plan aimed at securing mineral supply chains and strengthening economic resilience across member nations.

Australia's Strategic Role

Australia's participation is expected to be central to the discussions. In October, Canberra signed an agreement with Washington specifically designed to counter China's dominance in critical minerals, creating an $8.50 billion project pipeline.

The agreement leverages Australia's proposed strategic reserve, which is designed to supply vulnerable metals, including rare earths and lithium, during periods of supply disruption. Australia has reported that this initiative has attracted interest from Europe, Japan, South Korea, and Singapore.

China's Market Dominance

China's control over the critical minerals sector remains substantial. According to the International Energy Agency, China refines between 47% and 87% of global supplies of key critical minerals. Western governments have increasingly sought to reduce this reliance, particularly as Beijing has tightened export controls in recent years.

The timing of Monday's meeting follows recent reports that China had begun restricting rare earth and magnet exports to Japanese companies and imposed bans on certain dual-use items for Japan's military.

Complex Trade Relationships

Despite broader geopolitical tensions, Bessent noted that China continues to meet its commitments to purchase U.S. soybeans and ship critical minerals to U.S. firms. This highlights the complex interdependence that continues to shape global supply chains, even as nations work to diversify their mineral sourcing strategies.