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08/25/2026 | Press release | Distributed by Public on 08/25/2026 07:26
Renewed Efforts at Multilateralism in the Critical Minerals Sector
Renewed Efforts at Multilateralism in the Critical Minerals Sector
This issue brief unpacks issues surrounding the Forum on Resource Geostrategic Engagement, a multilateral effort to counter Chinese dominance in critical minerals supply chains.
Date
Aug. 25, 2026
Authors
Publication
Issue BriefReading time
11 minutes1. Introduction
In 2022, the United States launched the Minerals Security Partnership to accelerate the development of diverse critical minerals supply chains in cooperation with industry and allied governments. The partnership brought together 14 countries and the European Union (DOS 2025). It aligned with the Biden administration's "friend-shoring" strategy, which focused on diversifying supply chains by relocating key manufacturing capacity away from China and toward allied economies. Around the same period, the European Parliament passed the Critical Raw Materials Act, which aimed to reduce reliance on any single country-an implicit reference to China. The act set several benchmarks requiring certain percentages of the European Union's annual mineral consumption to be produced domestically by 2030: (1) at least 10 percent for extraction; (2) over 40 percent for processing; (3) 25 percent for recycling; and (4) no more than 65 percent of annual processing sourced from any single third country (European Commission 2024). It also promised to reduce administrative burdens and shorten timelines for processing and recycling permits.
However, these ambitious goals lacked a clear implementation road map and strategy. Long project timelines and unclear financing limited their feasibility; a critical mineral refinery typically requires years to become commercially mature, even with sustained technological and financial support. Few instruments were available to counter perceived foreign coercion, and cooperating governments were left relying on tariffs or export controls in other sectors, particularly semiconductors.
2. A New Multilateral Initiative: The Forum on Resource Geostrategic Engagement
Recognizing the need for renewed multilateral efforts to secure critical mineral supply chains, the Trump administration launched the Forum on Resource Geostrategic Engagement (FORGE) at the 2026 Critical Minerals Ministerial, which brought together 55 foreign delegations (Figure 1). As the Minerals Security Partnership's successor, FORGE was presented as a broader plurilateral initiative intended to coordinate critical minerals policies, pricing, and projects among US allies and partners (DOS 2026a).
Countries That Attended the 2026 Critical Minerals Ministerial
The ministerial announced three strategies: price floor mechanisms, a trade bloc, and national strategic stockpiles (DOS 2026a). The Trump administration proposed a preferential trade zone that would uphold reference prices, enforced through adjustable tariffs, to serve as price floors for each stage of critical mineral production. Price floors would presumably protect producers in the bloc from unfair market practices like dumping, where foreign producers sell goods below the cost of production to outcompete local producers. Further, the administration launched Project Vault to establish a new strategic minerals stockpile insulating American manufacturers from supply shocks. However, given uncertainties around how the reference price mechanism would be upheld and how China would respond, it is unclear whether a reference price mechanism would provide a long-term price signal necessary to spur investment (Spiller and Craig-Scheckman 2026). Moreover, the United States has continued to pursue bilateral memoranda of understanding with allied countries alongside the proposal for a plurilateral approach.
In July 2026, FORGE partners established two working groups to support collaboration at the project and policy levels (DOS 2026b). The Projects Investment Working Group will identify and facilitate investment for strategic critical mineral extraction, processing, and recycling projects, coordinating among partners and industry stakeholders to reduce risks and accelerate timelines. The Policy Coordination Working Group will advance shared critical minerals policy objectives by coordinating policy tools and messaging, facilitating information sharing, and promoting high standards in supply chains. These working groups provide the opportunity for FORGE countries to concretely define how price mechanisms would be constructed and upheld, as well as how the multilateral agreements would hold in light of existing bilateral agreements outside of FORGE.
3. Reference-Price Mechanisms in Multilateral Cooperation
The ministerial elevated what US Vice President J. D. Vance referred to as "erratic and unpredictable" mineral prices from a market concern to a strategic imperative, positioning reference pricing across the supply chain as a primary solution to the problem (DOS 2026c). A subsequent partnership agreement between the United States and European Union, brokered by the Office of the United States Trade Representative, mentions mechanisms including border-adjusted price floors, price gap subsidies, financial support for projects through joint ventures and offtake agreements, and strategic stockpiling that would elevate mineral prices as stocks are built up (USTR 2026a). For critical minerals sectors suffering from persistently depressed prices, these mechanisms aim to narrow the gap between market prices and commercial viability through recovery of costs, thereby preventing strategically important capacity from being squeezed out.
Because FORGE remains in its early stages, further negotiations are required to clarify many details, including how any price floor or other supports would be implemented and enforced. Nevertheless, past bilateral arrangements offer a preliminary indication of how future public-private price support mechanisms could operate.
One prominent precedent is the long-running Japan-Australia rare earth partnership built around Lynas Rare Earths. In 2011, Japan Australia Rare Earth (JARE), a special-purpose vehicle for public-private investment in the rare earth sector, was established by the Japan Organization for Metals and Energy Security (JOGMEC) and the Sojitz Corporation. In March 2023, JARE committed an additional $200 million in Lynas equity to support both light rare earth capacity expansion and the commencement of heavy rare earth separation. In return, Lynas agreed to supply up to 65 percent of its dysprosium and terbium output to the Japanese market, while Sojitz became the sole distributor of Lynas products in Japan (Sojitz and JOGMEC 2023). The broader objective was to build a more integrated rare earth supply chain from mining to downstream distribution. This partnership recently reached a major milestone: in October 2025, Japan began importing heavy rare earth elements from Australia for the first time (Sojitz 2026).
This framework was expanded further in March 2026. JARE and Lynas revised their supply agreement to include a firm offtake commitment for 5,000 metric tons of neodymium-praseodymium, backed by a $110 per kilogram (kg) floor price. If prices rise above $150 per kg, JARE receives 30 percent of the upside, capped at $10 million per year (Reuters 2026). The revised agreement added four heavy rare earth elements and reserved 75 percent of Lynas's heavy rare earth oxide output for Japanese industry, with JARE committing to purchase half of Lynas's total heavy rare earth production.
The JARE-Lynas model distributes risk across a public-private structure linking finance, refining, and downstream distribution, rather than concentrating it on a single actor. The price floor in the offtake agreements protects producers and refiners from sustained losses during periods of depressed prices, while the upside-sharing mechanism tempers buyer exposure when prices rise sharply. Government-backed offtake commitments also make the arrangement more durable, as public support is generally less sensitive than private capital to short-run fluctuations in profitability. The JARE-Lynas model offers an early example of how a future FORGE arrangement could combine state-backed finance, offtake security, and price support to insulate allied producers from Chinese market pressure.
A similar logic is evident in recent US initiatives. A 2025 US government contract with MP Materials also paired direct public financing with demand-side guarantees: the Department of Defense committed $400 million in preferred equity, provided a 10-year neodymium-praseodymium floor price of $110 per kilogram, and backed magnet sales through long-term offtake support, while JP Morgan and Goldman Sachs committed $1 billion in financing (Kalia et al. 2025). Another example is Project Vault, an initiative backed by both a $10 billion US Export-Import Bank loan and $2 billion in private capital, launched to support the US Strategic Critical Minerals Reserve, which stores raw materials across the country (EXIM 2026).
Congress has also signaled its intention to spur private sector investment. In June 2026, the House passed the Developing Overseas Mineral Investments and New Allied Networks for Critical Energies (DOMINANCE) Act (H.R. 7037, 119th Cong., 2nd sess.), formally codifying US participation in FORGE and mobilizing resources to expand the non-Chinese critical minerals supply chain. The act designates an Office of Energy Security Pacts within the State Department to align tools across government agencies to more effectively support mineral investments abroad.
4. Expansion Capacity Review
For FORGE countries to undercut China's processing monopoly, they must expand their own processing capabilities. We reviewed countries present at the ministerial to assess which are signaling a credible commitment to reducing near-term reliance on China by expanding their processing capacity of cobalt and dysprosium, two critical minerals for which there are particularly urgent defense and vehicle needs.
4.1. Cobalt
China currently dominates cobalt refining, accounting for approximately 79 percent of global refined production (Figure 2). All three of the next-largest cobalt-refining countries, Finland, Canada, and Japan, are prospective members of FORGE.
2024 Global Cobalt Refining Capacity by Country
Source: Authors' analysis of data from Cobalt Institute (2025).
We reviewed the announced cobalt-processing projects by potential FORGE countries, investigating project-level details, including expected output and timelines, of the most promising projects expected to begin processing before 2030 (Table 1). We find that even with the possible additional output of about 37,350-40,350 metric tons from these as-yet-uncommitted nations, the total output would still fall short of displacing China as the dominant processing nation.
Table 1. Expected Expansions of Cobalt-Refining Capacity Among Potential FORGE Countries
ᵃ Expansion from the current refining capacity of 6,250 metric tons to 12,250 metric tons.
ᵇ Initial annual production capacity of 3,000 metric tons, with 2,000 metric tons as cobalt sulfate and 1,000 metric tons of cobalt alloy grade metal. Expansion of up to approximately 6,000 metric tons depending on offtake demand.
ᶜ Approximate sum of stated capacities across projects. Total combines different product forms (contained cobalt, cobalt sulfate, and cobalt metal cathode), which have different cobalt content by weight and should be treated as an order-of-magnitude estimate rather than a precise aggregate of cobalt alone.
4.2. Dysprosium
China's dominance is even more evident in its refining share of rare earth elements, which include dysprosium. China alone is responsible for processing approximately 90 percent of rare earth elements globally (IEA 2025).
A compilation of processing capacity from dysprosium projects in the pipeline within potential FORGE nations finds a similarly limited range to that of cobalt production capacity (Table 2). The total output of announced processing projects that include dysprosium is approximately 11,000 metric tons, although we expect actual dysprosium output to be even lower, as this total also captures other heavy rare earth elements processed alongside it.
Table 2. Expected Expansions of Dysprosium Refining Capacity Among Potential FORGE Countries
ᵃ Approximate sum of stated capacities across projects. Total includes heavy rare earth output volumes, with dysprosium among other elements, and should be treated as an order-of-magnitude estimate rather than a precise aggregate of dysprosium alone.
5. Findings
Cobalt and dysprosium supply chains are diversifying geographically, with many refining projects the first of their kind in their respective countries. The Canadian refinery under construction by Electra Battery Materials Corporation is North America's first cobalt sulfate refinery (Electra Battery Materials 2025). In Australia, the Kwinana Cobalt Refinery is the country's first dedicated cobalt refinery producing battery-grade sulfate (Cobalt Blue Holdings, n.d.). Given that China monopolizes the rare earth element supply chain to an even greater extent, new rare earth element projects are breaking milestones. Australian firm Lynas Rare Earths became the first producer of separated heavy rare earths outside China after it began producing separate dysprosium at its Malaysian plant in 2025 (Govind 2025).
Many of these projects are receiving substantial government investments, indicating that countries recognize the need to support private companies in developing refining capabilities. After the European Union adopted the Critical Raw Materials Act, setting benchmarks to reduce external dependence, the European Commission approved dozens of strategic projects, including the Caremag processing project, which is expected to cover 50 percent of the European heavy rare earths needs by 2030 (European Commission 2025b). Strategic projects will receive financing, support connecting with offtakers, and streamlined permitting to reduce the 5- to 10-year permitting process down to 27 months (European Commission 2025a). Elsewhere, governments are similarly supporting homegrown projects. The Iluka Eneabba facility, Australia's first fully integrated rare earths refinery, is being fully funded under a risk-sharing agreement with the Australian government (Iluka Resources, n.d.). At the state level, the Queensland government designated the Townsville Energy Chemicals Hub Project, a sustainable battery materials refinery project, as a prescribed project, a designation that prioritizes decisionmaking on government approval because of its economic importance (OCG 2026).
From this review, we conclude that the projects anticipated to come online will not add enough refining capacity to significantly challenge China's existing dominance. In 2024, global refined cobalt production was 222,000 metric tons, and China accounted for 79 percent of the market, or 175,000 metric tons (Cobalt Institute 2025). With a total output of about 37,350-40,350 metric tons, the projects listed in Table 1, while a meaningful step toward diversification, represent only a fraction of China's current refining output.
Further, although a growing number of projects have been announced, they are in varying stages of development, with several still in the feasibility stage. Price competition from China could challenge projects' viability without government support. In 2025, Jervois Global, the parent company of Jervois Finland Oy, which is developing the Jervois Finland Cobalt project, announced bankruptcy (Scheyder and Onstad 2025). The company began struggling after a Chinese-backed mine opened in the Democratic Republic of Congo, increasing global cobalt production and consequently reducing cobalt prices.
6. Recommendation: Policymakers Should Clarify FORGE's Coordination Framework
While allies have broadcast their intention to coordinate through FORGE, details regarding how it will operate are limited. Several weeks after FORGE was announced, the Office of the United States Trade Representative requested public comments on the design of a plurilateral Agreement on Trade in Critical Minerals, which are now being reviewed (USTR 2026c). The office later announced separate action plans with the European Union and then Japan to coordinate trade policies on the critical minerals supply chain, with a view toward concluding plurilateral agreements, although neither action plan referenced FORGE (USTR 2026b).
Whatever the final structure, FORGE will need enforcement mechanisms that ensure members adhere to the coordinated trade policies and mechanisms. While countries are incentivized to join multilateral efforts to diversify their supply chains, they are also incentivized to defect afterward. This dynamic is captured by the prisoner's dilemma: an actor who decides to defect after committing to cooperate will achieve a higher payoff, assuming others continue cooperating, thereby incentivizing self-interested actors to defect. For example, if FORGE members agree to a common price floor, each member will be incentivized to quietly undercut that price to advantage its own domestic industry relative to other members. To mitigate this possibility, FORGE would need to raise the cost of defection through credible enforcement and monitoring, including transparency requirements and penalties for incidents of noncompliance, though how these could be feasibly imposed on sovereign nations is unclear.
An inherent tension also exists between the goal of collective cooperation and each member's self-interest to leverage its processing capacity for domestic usage. Recognizing the vulnerabilities posed by offshore supply chains, countries are onshoring to the maximum extent possible. Given the European Union's targets for onshoring supply chains, it may not translate into increased supply for the United States or other FORGE members if these efforts are oriented toward achieving domestic self-sufficiency rather than exporting to allied partners.
However, every member cannot realistically onshore its processing capacity for every critical mineral. For example, while Finland may process sufficient cobalt to meet its domestic needs, its lack of processing capacity for rare earth elements means it will still rely on third parties. Since autarky is not feasible, FORGE enables countries to supplement their supply chain deficits through imports, creating a framework of coordinated specialization whereby countries contribute according to their comparative advantage. Members could leverage the forum to identify which minerals to prioritize for domestic processing capacity and which to import from trusted allied partners. FORGE could then facilitate reciprocal market access agreements between members, guaranteeing mutual benefits.
Thus by providing the framework for decisionmaking and market coordination across allied nations, FORGE lays the groundwork for a more diversified critical minerals supply chain. However, given China's dominant position, after decades of investment into expanding its critical minerals processing capacities, the investments made by allied nations are unlikely to radically alter the landscape within the next few years.
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