Geopolitical Crossroads: How G7 Summit Moves and US-Iran Tensions Are Shaping Critical Mineral Supply Chains

The 2025 G7 Summit in Kananaskis, Canada, marked a turning point in global efforts to secure critical mineral supply chains against rising geopolitical risks. As tensions between the U.S., Iran, and Israel escalate alongside China's stranglehold on rare earth elements (REEs) and energy metals, investors face a precarious balancing act: capitalizing on strategic opportunities while mitigating risks tied to supply chain fragility. Here's how the geopolitical chessboard is reshaping the critical minerals landscape—and where to position investments for resilience.

G7's Playbook: Diversification or Delusion?

The G7's Critical Minerals Investment Fund, announced at the summit, aims to pool $13 billion in initial capital to de-risk projects in Vietnam, Namibia, and the Democratic Republic of the Congo (DRC). The fund's success hinges on vertical integration—ensuring mined materials are processed within allied nations to avoid feeding China's dominant refineries. For example, Japan's model of securing equity stakes and offtake agreements in Namibia's Lofdal REE project exemplifies this strategy.

Yet challenges loom. The Lobito Corridor project, a $6 billion rail-and-port upgrade in Angola and Zambia, faces delays due to funding gaps and bureaucratic hurdles. Meanwhile, the Serra Verde REE project in Brazil—a potential G7 target—remains tied to Chinese refineries, underscoring the need for stricter processing partnerships.

US-China Trade War: Rare Earths as Economic Weapons

The U.S.-China trade war has escalated into a full-blown critical minerals crisis. U.S. tariffs on Chinese REEs now total 55%, combining Section 301 duties and fentanyl penalties, while Beijing's April 2025 export licensing restrictions have slashed U.S. industry stockpiles to 2–3 months' supply. Automakers like Ford and GM face production halts, with chip-like shortages now extending to magnets for electric vehicles (EVs).

The Inflation Reduction Act offers a lifeline: subsidies for domestic processing are driving firms like MP Materials (MP) to expand vertically. Yet China's 92% global REE processing dominance remains unchallenged. Investors should prioritize miners with independent refining capacity, such as Australia's Lynas Corporation (LYC), and recyclers like American Manganese (AMYF), which can reclaim REEs from EV batteries.

US-Iran-Israel Tensions: The Strait of Hormuz and Beyond

The Iran-Israel conflict has introduced a new layer of risk. A closure of the Strait of Hormuz—through which 20% of global oil flows—could spike Brent crude prices by 20–40%, destabilizing energy markets. For energy metals like copper and aluminum, the fallout is twofold:
1. Supply chain disruptions due to rerouted shipping and insurance costs.
2. Demand shocks from inflation and geopolitical uncertainty.

Iran's own ambitions complicate matters. Its newly launched monazite production plant aims to process 17 rare earth elements domestically, positioning it as a future rival to China. However, sanctions and regional instability could derail this progress, making Iran's rare earth sector a high-risk, high-reward play.

Investment Strategy: Diversify, Recycle, Innovate

The path to resilience requires three pillars:
1. Diversification:
- MP Materials (MP): The only U.S. rare earth miner with end-to-end processing.
- Lynas Corporation (LYC): Australia's dominant producer, benefiting from G7-Australia partnerships.
- Rare Earth Minerals (REM): Focused on African deposits, aligning with G7's DRC strategy.

1. Recycling and Substitution:
2. American Manganese (AMYF): Leading lithium and REE recycling tech.
3. Ucore Rare Metals (UCLE): Developing Alaska's Bokan Mountain deposit.

4. Magnettech: Neodymium-free magnet innovator.

5. Geopolitical Hedges:

6. Oil majors with alternative infrastructure: Companies like Chevron (CVX) or TotalEnergie (TTE) with diversified supply routes.
7. U.S. Strategic Petroleum Reserve (SPR): A temporary buffer, but not a long-term solution.

Risks to Watch

• G7 fund underfunding: The $13 billion commitment falls short of the $2 trillion needed by 2040.
• China's countermeasures: Beijing may accelerate its own investments in African and Latin American projects.
• Strait of Hormuz closure: Could trigger a global energy crisis, spiking metals demand for defense and infrastructure.

Conclusion

The G7's ambitions to secure critical mineral supply chains are laudable but unproven. Investors must pair exposure to diversified miners and recyclers with caution toward regions like the DRC and Namibia, where political risks remain high. Meanwhile, the U.S.-Iran-Israel conflict underscores the fragility of energy and mineral trade routes—highlighting the need for geopolitical awareness and portfolio diversification. Those who navigate these crossroads wisely may turn geopolitical storms into investment tailwinds.