G7 Critical Minerals Ambitions and Iran's Natural Resources

On June 15, Group of Seven (G7) heads of state, including President Donald Trump, convened in France for the annual summit. Featured prominently on the agenda were avenues for critical minerals cooperation, including price coordination and commitments to limit rare earth sourcing from China. A day later, President Trump and Vice President JD Vance virtually signed an agreement with Iran to end hostilities, reopen the Strait of Hormuz, freeze Iranian nuclear activities, and usher in a new era of economic investment in Iran. While sanctions have long crippled the Iranian economy and blocked foreign investments into energy, infrastructure, and natural resources, the agreement may offer an opportunity to advance Iran’s economic relationship with the West, particularly within the mining sector.

Q1: What has the G7 agreed on for critical minerals cooperation?

A1: For the first time, G7 leaders endorsed a measurable supply chain resilience target: reducing dependence on any single non-G7 supplier of rare earths and permanent magnets to below 60 percent by 2030, with the longer-term objective of lowering that figure to 50 percent. For all other critical minerals, relevant ministers have been tasked with establishing clear dependency-reduction targets and implementation plans before the end of the year.

G7 countries have not agreed to a coordinated price floor mechanism. A major obstacle to establishing a price floor has been the lack of agreement over how it should be funded. The central question is who should bear the cost. G7 governments have been reluctant to use public funds to support a price floor, particularly as countries such as the United Kingdom and Australia face growing fiscal pressures and competing demands on public services.

At the same time, policymakers have been hesitant to pass the cost on to end users. In price-sensitive sectors such as automotive manufacturing, higher input costs could translate into higher vehicle prices, dampening demand and ultimately reducing industry growth. As a result, policymakers face a difficult balancing act: supporting critical mineral production without placing an unsustainable burden on taxpayers or undermining the competitiveness of downstream industries.

Q2: Is the G7 agreement to limit imports of Chinese rare earths and magnets by 2030 feasible?

A2: The target is ambitious and will be challenging to achieve. China is responsible for 93 percent of permanent magnet production globally, used across the modern economy in automotives, renewable energy technologies, consumer electronics, and medical equipment. G7 nations are some of the largest consumers of rare earth magnets in the world, accounting for over half of global imports.

While the West has made significant progress in diversifying rare earth mining operations, China still dominates the refining segment of the supply chain. Today, China controls an estimated 85–91 percent of global rare earth refining. This dominance is even more pronounced for the heavy rare earths required for permanent magnets, including dysprosium and terbium.

Building refining capacity outside of China will be crucial to meeting this 60 percent threshold. While projects have been announced in coordination with government financing support across the United States, Australia, Brazil, France, Japan, and Saudi Arabia, not all projects are likely to reach commercial production within the next four years. Many projects are led by startup companies with unproven technology on a commercial scale. USA Rare Earths has publicly announced its intention to expand its footprint from Stillwater, Oklahoma, to Goias, Brazil, and Lacq, France. However, the company is already facing a lawsuit from a competitor for allegedly using stolen proprietary technology and was only just selected by the Department of Energy for pilot scale testing of its continuous ion exchange separation technology in May of 2026. Even more seasoned producers such as Lynas Rare Earths have encountered challenges with meeting project milestones. In 2021, the Department of Defense awarded Lynas with Defense Production Act funding to build a heavy rare earth processing facility in Seadrift, Texas. After years of permitting troubles and rising costs, Lynas announced that the project was effectively shelved in 2025.

The experience of G7 partner Japan is indicative of just how challenging it is to build rare earth capacity outside of China. As the largest rare earth magnet producer outside of China, and a frequent target of Chinese export controls, Japan has spent over 15 years working to de-risk its supply chains. Its strategy has emphasized long-term investments in both homegrown innovation in recycling, processing technologies, and deep-sea exploration, as well as in international production and resource development. Still, Japan has only just started to shift reliance from China to regional partners in Australia, South Korea, and Vietnam. In 2024, Japan was still the world’s largest importer of Chinese rare earth metals. Japan serves as an important reminder that government targets and capital allocations alone do not build supply chains.

Q3: What does the U.S.-Iran peace deal mean for critical minerals supply chains?

A3: President Trump signed the U.S.-Iran agreement at the Palace of Versailles in France at the conclusion of the G7 summit. Following the signing, the United States transmitted a photograph of the executed document to Iranian officials, after which Iranian President Masoud Pezeshkian signed the agreement.

The agreement establishes a 60-day framework for negotiating a final comprehensive deal between the two countries. It also commits the United States to issuing sanctions waivers that would allow Iran to resume oil exports, outlines measures to reopen and secure navigation through the Strait of Hormuz, and includes a commitment by the United States and its regional partners to develop a $300 billion reconstruction fund to support Iran's economic recovery and infrastructure development.

The reopening of the strait should help bring down sulfur and sulfuric acid prices, which have sharply increased the costs across critical mineral supply chains. Sulfur prices have risen by more than 50 percent since the outbreak of the Iran conflict, while sulfuric acid prices have more than doubled in some regions. The disruption has tightened physical supply, increased operating costs for refiners and processors, and forced some facilities to reduce output. Sulfuric acid is a key input in the processing of lithium, nickel, copper, and rare earths, meaning price spikes have immediate implications for production economics.

Additionally, as part of the agreement, Iran is expected to regain access to frozen assets. This could have implications for the country’s mining and resource investments abroad. For example, Iran holds a 15 percent stake in the Rössing Uranium Mine, acquired through a 1976 investment. Because the mine’s majority owner, the China National Uranium Corporation, has remained compliant with international sanctions, revenues attributable to Iran’s stake have reportedly been placed in escrow accounts that Tehran has been unable to access. Should sanctions relief proceed under the agreement, Iran may be able to recover or gain access to some of these accumulated funds.

Q4: Can mining help drive Iran’s economic reintegration into global markets?

A4: The agreement included a $300 billion investment fund in U.S.-Iran framework. Iran has significant mineral resources—particularly copper, aluminum, and zinc. The country possesses approximately 2.6 billion metric tons of identified copper reserves, equivalent to about 5 percent of global known reserves, making it one of the world’s most significant copper resource holders. Following the easing of international sanctions in 2016, Iran sought to attract foreign investment into its copper sector, reportedly holding discussions with major mining companies including Glencore and Rio Tinto. At the time, the government outlined ambitious plans to expand copper concentrate production to as much as 2 million metric tons annually by 2025, a dramatic increase from historical production levels. Central to these ambitions is the Sarcheshmeh Copper Complex, which is widely regarded as one of the world’s largest open-pit copper mines and serves as the cornerstone of Iran’s copper industry.

While Iran has significantly expanded its copper production capacity over the past decade, with annual copper concentrate output increasing from 783,000 metric tons in 2014 to approximately 1.2 million metric tons in 2021, sanctions have made it difficult to further expand the sector owing to challenges with importing equipment and investment limitations (an additional 17 Iranian mining companies were sanctioned in 2020). If sanctions are eased, this could drive an investment in Iran’s mining sector, particularly copper, which is attracting significant investment globally due to its use in data centers and energy infrastructure.