China's Rare Earth Crackdown vs. the G7's 60% Supply Cap: Inside the June 2026 Escalation

On June 22, 2026, Beijing imposed its most targeted export controls yet on US rare earth companies, blocking dual-use shipments to MP Materials and USA Rare Earth while blacklisting 46 additional American firms from government procurement. The move came just five days after G7 leaders gathered in Évian, France, to sign a binding 2030 target limiting any single non-G7 country to 60% of their rare earth imports — a measure aimed squarely at China, which controls roughly 70% of global rare earth mining and over 90% of refining .

Together with the UK's £50 million domestic minerals programme and a Japan-France recycling partnership, June 2026 marks the most coordinated Western push to date to diversify critical mineral supply chains. But Beijing's calibrated retaliation shows it remains willing to weaponize its refining bottleneck, raising the stakes for allied diversification efforts.

China's new export controls: targeting the supply chain's softest point

On June 22, China's Ministry of Commerce (MOFCOM) issued Announcement No. 23 of 2026, adding 10 US entities to its export control list under the Export Control Law and Regulations on the Export Control of Dual-Use Items . The list includes rare earth producers MP Materials (the world's largest rare earth supplier) and USA Rare Earth, along with eight defense-oriented firms such as Aveox and Red Cat Holdings .

Chinese companies are now barred from exporting dual-use items — goods with both civilian and military applications — to these entities . On the same day, China also added 46 US companies to its government procurement blacklist, preventing them from selling to Chinese state buyers .

These sanctions are widely reported as a tit-for-tat response to earlier US defense blacklists and Pentagon export restrictions . By targeting US rare earth producers — exactly the companies America needs to build alternative supply chains — Beijing sent a clear signal that it can squeeze the bottleneck where its control is strongest: processing and refining.

The G7's binding 60% cap: the first numerical target with teeth

At the Évian summit on June 17, 2026, G7 leaders agreed that no single non-G7 country should supply more than 60% of their imports of rare earths and permanent magnets by 2030, with an ambition to reduce that share to 50% as soon as possible thereafter .

The target is binding and explicitly aimed at reducing dependence on China, which currently supplies roughly 70% of global rare earth mining and over 90% of refining . Leaders also launched a Critical Minerals Alliance with a new crisis-response platform and expanded the International Energy Agency (IEA)'s role in monitoring supply chains and coordinating stockpiles .

The G7 declaration expressed concern over "non-market policies and practices" and the use of economic coercion in critical mineral trade, without naming China directly . The commitment goes beyond declaratory policy: it is the first collective import target with a hard deadline and institutional backing.

UK's £50 million domestic push: extracting and recycling at home

The UK's "Vision 2035" Critical Minerals Strategy, updated in late 2025 and reaffirmed in June 2026, allocates £50 million from the Department for Business and Trade (DBT) to support domestic critical minerals projects . Specific targets by 2035 include: 10% of UK demand met by domestic production and 20% through recycling, including at least 50,000 tonnes of lithium produced domestically .

The UK government framed the £50m fund as a way to "turbocharge domestic production" and "cut reliance on imports" from concentrated sources . The funding will be distributed across extraction, processing, and recycling, with £25 million allocated to an accelerator programme for promising projects . The strategy also includes a national rare earth magnet hub and initiatives to strengthen demand aggregation .

Currently, the UK produces only 6% of its critical mineral needs domestically . The new targets represent a significant acceleration, but achieving them will require building entirely new midstream processing capacity — the very step where China dominates most.

Japan-France recycling collaboration: targeting the 90% refining bottleneck

Japan and France signed a Roadmap on Critical Minerals in April 2026, following a summit between Prime Minister Sanae Takaichi and President Emmanuel Macron . The roadmap covers joint investment in rare earth mining, processing, and recycling projects, with a focus on building supply chains outside China .

At the core of the collaboration is the Caremag heavy rare earth refining project in Lacq, southwestern France. Japanese stakeholders — including Iwatani Corporation and the state-owned Japan Organization for Metals and Energy Security (JOGMEC) — are investing up to €110 million ($120 million) in the facility, which is expected to begin operations by late 2026 or early 2027 . The project will produce approximately 590 tonnes of dysprosium and terbium annually, securing around 20% of Japan's future heavy rare earth demand .

The collaboration extends beyond refining to rare earth recycling: France and Japan are building Europe's first large-scale rare earth recycling plant, backed by €216 million in funding, with a capacity to process 2,000 tonnes of magnets and 5,000 tonnes of mining concentrates annually .

The big picture: declaratory policy meets hard deadlines

Factor	China's current share	G7/Allied response
Rare earth mining	≈70% of global production	60% import cap by 2030; UK domestic & recycling targets
Rare earth refining	≈90% of global processing	Japan-France recycling and processing roadmap
Supply chain leverage	Dual-use export controls & procurement blacklists	G7 Critical Minerals Alliance, IEA monitoring, stockpile coordination

These June 2026 measures mark a shift from declaratory policy to binding, funded, and institutionalized action. The G7's 60% cap is the first collective import target with a hard deadline. The UK's £50 million fund and Japan-France recycling collaborations target the refining bottleneck (the 90% share), where China's grip is strongest. China's retaliatory export controls on MP Materials and USA Rare Earth show Beijing is willing to weaponize that bottleneck, accelerating the urgency of allied diversification.

What happens next? The G7's target is 2030, but the real deadline may be November 10, 2026 — when China's suspended October 2025 export controls are set to snap back . If those broader controls are reimposed, the pressure on allied supply chains will intensify dramatically, and today's commitments will be tested against operational reality.