China’s dominance over critical minerals in global supply chains was a powerful bargaining chip in trade talks between Beijing and Washington that concluded with both sides saying they have a framework to pursue a deal…China has spent decades building the world’s main industrial chain for mining and processing such materials, which are used in many industries such as electronics, advanced manufacturing, defense and health care…Responding to ever higher tariffs and other controls on advanced technology, China told exporters of certain key rare earths and other critical minerals to obtain licenses for every shipment abroad. Approvals can take weeks, leading to supply chain disruptions in the U.S. and other countries…President Donald Trump said Wednesday that China would make it easier for American industry to obtain much-needed needed magnets and rare earth minerals, clearing the way for talks to continue between the world’s two biggest economies. In return, Trump said, the U.S. will stop efforts to revoke the visas of Chinese nationals on U.S. college campuses…Experts say, however, Beijing is unlikely to do away with the permit system enabling it to control access to those valuable resources…“I think what the Chinese have proven is they have now created an entire export control regime for rare earths,” said Daniel Kritenbrink, a partner at The Asia Group consultancy. “They can turn that spigot on and off at will.”…The only scenario in which China might deregulate its critical minerals export is if the U.S. fully removes tariffs imposed on Chinese goods as part of the trade war, said Wang Yiwei, a professor of international affairs at Renmin University, echoing the Chinese government’s earlier stance…In 1992, Deng Xiaoping, the leader who launched China’s ascent as the world’s biggest manufacturing power, famously said “the Middle East has oil, China has rare earths,” signaling a desire to leverage access to the key minerals…Beijing’s across-the-board requirement for export licenses for some critical minerals has put pressure on world electronics manufacturers and automakers…Since beginning his second term in office, Trump has made improving access to critical minerals a matter of national security. But the U.S. has an incredibly long way to go to catch up with China, experts say…“There are going to be some real issues here unless we can figure out how to get along with China for a period of time while we’re developing our own resources and our mainstream processing,” Smith said.

The tentative deal between the United States and China may represent a retreat from the worst-case scenario of a total collapse of trade between the world's two biggest economies, but it creates more problems than it solves…The United States will impose tariffs of 55% on imports from China, while China can levy 10% on its purchases from the United States…This still represents a sharp increase in tariffs from the 25% on imports from China that was in place when Trump returned to the White House in late January…Tariffs at such a level are likely high enough to cause trade to shrink while boosting inflation in the United States, and lowering economic growth in both countries…If Beijing does keep 10% tariffs on imports of U.S. energy commodities, these will be high enough to ensure that virtually no U.S. crude oil, coal or liquefied natural gas enters China, eliminating one of the few products that China is able to buy in large quantities from the United States…It's also questionable whether the tariffs will be enough to prompt more manufacturing in the United States, or whether they will simply cause some production to shift from China to countries with lower import duties…Trump did single out rare earths when talking up the trade deal, saying China will provide the metals that are found in a wide range of electronics and vehicles "up front"…But the deal does little to solve the underlying problem with rare earths, magnets and other refined metals such as lithium and cobalt, which are dominated by Chinese supply chains…At best, the agreement this week is a kick the can down the road type of deal, insofar as it prevents an immediate crisis in manufacturing in the United States, but leaves open the possibility that Beijing will once again threaten supplies if there are problems between the two sides in the future…It's all very well to designate a mineral as critical, but if you don't actually do anything to secure a supply chain, then you really have to question just how critical the mineral is…Rare earths aren't really that rare, although finding economic deposits is challenging…It's the same for lithium, copper, cobalt, tungsten and a range of other metals that many governments designate as critical…But developing supply chains for these minerals and refined metals outside of China is costly, and so far Western countries and companies have been unwilling to commit funds…Companies won't develop new mines and processing plants if they have to compete with China at market prices, as very few projects would be economic…Governments have been sluggish in developing policies that would support new supply chains, such as guaranteeing offtake at prices high enough to justify investment, or by providing loans or other incentives…This means that the world remains beholden to China for these metals, and is likely to remain so until governments start to act rather than just talk.

Released on Wednesday, the report, titled 'Critical Path: Securing Canada’s place in the global critical minerals race', calls for policy shifts to enable Canada to meet surging demand for six key minerals: copper, nickel, lithium, graphite, cobalt, and rare earth elements…Although Canada holds significant reserves, current production levels remain well below what is needed to satisfy domestic and international markets…To unlock its critical minerals potential, Canada would need to attract C$30-billion in new investment over the next 15 years to meet domestic demand alone. That number rises to C$65-billion to align with projected global demand, which the report notes is expected to double by 2040…“Critical minerals represent a multibillion-dollar opportunity for Canada in a global energy transition that continues to pick up pace. But Canada’s critical minerals sector is struggling to attract enough investment to keep up with demand,” said Canadian Climate Institute president Rick Smith…The report warns that the success of critical minerals projects will depend not only on market conditions, but on investor confidence, which is currently constrained by commodity price volatility and long permitting timelines…The institute recommends that governments step in to reduce investment risk and accelerate investment. One way to do this is to share the financial risk of projects through agreements like equity investments, contracts for difference, or offtake agreements…The report states that the most direct way for governments to share the financial risks of a mine is to take equity shares in the project. As equity holders, governments can provide the capital that private markets won’t, sharing both the downside risks and the upside potential of projects in the face of long payback periods…Similarly, contracts-for-difference are contracts designed to protect investors from price volatility by establishing a negotiated settlement price. When market prices fall below the defined settlement price, a government pays the difference to the producer. When prices rise above it, the producer pays the surplus back to the government…John Stackhouse, senior VP in the Office of the CEO at RBC, said government-backed financial tools will be essential to unlock private-sector funding…“Canada has a significant opportunity at hand to develop our critical mineral reserves, which among other imperatives are critical for a lower-emissions economy,” Stackhouse said. “This report clearly demonstrates the importance of making it easier for mining projects to secure financing to make this happen. By deploying loan guarantees and other financial risk-sharing instruments to derisk projects, federal and provincial governments in Canada can crowd-in private capital, and keep projects on track despite market uncertainty.”

Congo, the world's largest cobalt producing country, introduced a four-month ban on all cobalt exports in February in an attempt to curb a supply glut that helped send prices to nine-year lows and stifled its tax revenues…As a result of the ban, London-listed Glencore took the rare step of declaring force majeure on some supply agreements for cobalt produced at its Congolese operations, invoking a measure meant for unforeseeable circumstances that prevent a contract's execution, the sources said…Glencore, the world's second-largest cobalt producing company, mined 35,100 metric tons of cobalt contained in concentrate and hydroxide at its Congo operations last year…Many of its customers are still receiving cobalt under their contracts, the sources said…Growing surpluses - partly due to lower than expected demand for electric vehicles and a supply surge from operations owned by China's CMOC Group - drove down cobalt prices to nearly $10 a pound or $22,000 a ton in February…Congo's export ban and a force majeure declaration in March by Eurasian Resources Group have since helped prices recover by around 35% to trade at $15.80 a pound or $34,832 a ton on Wednesday .