EU to offer US critical minerals partnership to check China

The European Union will pitch the US on a critical minerals partnership to curb China’s influence, looking to shape the Trump administration’s push to strike global agreements this week.

The EU is prepared to sign a memorandum of understanding with the US to develop a “Strategic Partnership Roadmap” within three months, according to people familiar with the matter.

The partnership aims to jointly find ways to source critical minerals, which are needed for most modern technologies, without relying on China. Both the US and EU have become tethered to abundant, cheap Chinese minerals, giving Beijing leverage over their supply chains.

The proposal offers several ways to reduce this dependence, said the people, who spoke on the condition of anonymity to discuss private deliberations.

Both sides are aiming to conclude the negotiations within the next 30 days, according to a separate draft statement that the US and the European Commission, the EU executive’s arm, are expected to release on Wednesday and seen by Bloomberg News.

The memorandum suggests the EU and US explore joint critical mineral projects and price-support mechanisms. It also recommends ways to shield both markets from an oversupply of outside minerals and other forms of market manipulation. Meanwhile, the proposal says the two sides should build secure supply chains between each other.

Notably, the EU proposal also insists both sides respect each other’s territorial integrity, the people added. The US-EU relationship nearly ruptured in recent weeks after President Donald Trump signaled plans to buy Greenland, a territory of EU-member Denmark.

The EU proposal comes as the US is preparing to convene dozens of foreign ministers and senior officials from allied countries on Wednesday to pursue agreements to cut reliance on Chinese critical minerals.

According to a draft statement, the EU, the US and other partners intend to explore a plurilateral trade initiative with like-minded nations on trade in critical minerals.

The White House did not immediately respond to a request for comment on the draft statement on Tuesday.

“Such a plurilateral trade initiative could include exploring the development of coordinated trade policies and mechanisms, such as border-adjusted price floors, standards-based markets, price gap subsidies, or offtake agreements,” the draft statement said. The draft statement could still change before its scheduled release on Wednesday.

Numerous US administrations have made similar pushes on critical minerals over the years, trying out several different strategies with little success.

The commission called the talks “vital to diversify our supplies away from any single country,” without commenting on the bloc’s proposal or the draft statement.

The issue is a top priority for Washington after Beijing imposed export restrictions last year on so-called rare earths. The constraints were delayed in October as part of a deal between Trump and Chinese leader Xi Jinping, but American officials are now determined to make quick progress on the matter.

In particular, the US is pushing countries to agree on a pricing mechanism to help insulate rare-earth mineral refiners and extractors from cheaper Chinese exports that could undercut supplies mined and refined in the west.

As part of this push, the US pressed some EU member states to sign bilateral deals. In response, the commission asked the bloc’s countries to stick together, and EU capitals gave the commission a mandate to negotiate an agreement.

Officials have expressed skepticism, however, that a substantive deal could be finalized quickly enough.

Still, the EU’s offer shows the talks remain on track. And it reveals the two sides may find common ground.

For instance, the people said the EU’s memorandum notes the possibility of stockpiling critical minerals, which is also a Trump focus. The US president on Monday launched a $12 billion critical mineral stockpile to help protect manufacturers from sudden supply shortages.

The key pillars of the proposal the EU has drafted and is prepared to sign, according to the people, are:

• Cooperating to secure supply chains and cut dependencies, including by developing premium markets internationally and working together to withstand any disruptions;
• Deepening industrial and economic integration, including through joint projects;
• Exempting each other from export restrictions pertaining to critical raw minerals;
• Collaborating on research and innovation along the entire value chain;
• Exchanging information, including on supply chains and identifying risks, as well as working together to bring more transparency to the market. Measures to prevent disruptions could include stockpiling or the creation of a EU-US response group;
• Cooperation on export restrictions applied to third countries.

(By Alberto Nardelli and Jenny Leonard)