Manila, Washington sign deal to develop critical minerals, rare earths sector

Manila: The United States is accelerating efforts to assemble a preferential trading bloc for critical minerals, drawing in partners such as the Philippines as Washington seeks to reduce global dependence on China-dominated supply chains.

On Wednesday, the Philippines and the US signed a memorandum of understanding (MOU) aimed at developing the country’s critical minerals and rare earths sector, a move Philippine officials said could position the country as a global processing hub.

The agreement was signed by Environment Secretary Raphael Lotilla and US Undersecretary of State for Economic Affairs Jacob Helberg on the sidelines of the 2026 Critical Minerals Ministerial hosted by the US State Department, which convened ministers and senior officials from 54 countries and the European Commission.

For the Philippines, Lotilla said participation in the emerging bloc aligns with commitments to responsible mining, environmental protection and safeguarding local communities, while anchoring the country in what the US envisions as the future architecture of global critical minerals trade.

Critical minerals and rare earths are essential to electric vehicles, renewable energy systems, electronics and advanced manufacturing —industries where China currently dominates global processing capacity.

The MOU aligns the Philippines with Washington’s broader strategy to diversify supply chains and build a network of trusted partners for these materials.

According to the Department of Environment and Natural Resources (DENR), the agreement supports a shift in Philippine policy away from exporting raw mineral ores toward domestic processing and value-added production, integrating the country more deeply into global supply chains shaped by US-led initiatives.

Lotilla said the partnership would help create a “Filipino-led industry that processes our own resources, creates high-skilled jobs and strengthens our position in the global high-tech supply chain,” adding that greater domestic processing would allow the country to retain more of mining’s economic benefits.

With the signing of the MOU, the Philippines joins other US partners—including Australia, Canada, Japan, South Korea, the United Kingdom, and Asean neighbors Malaysia and Thailand — in Washington’s expanding network aimed at securing reliable and diversified mineral supplies.

The agreement comes as the US intensifies its push to formalize cooperation among allies.

During the ministerial meeting, US Vice President JD Vance outlined plans to marshal partner countries into a preferential trade bloc for critical minerals, including the introduction of coordinated price floors to shield domestic industries from market distortions.

China has long exercised its dominance over mineral processing as a tool of geo-economic leverage, at times restricting exports, suppressing prices and undercutting rival producers.

While not naming China directly, Vance said the goal was to prevent markets from being flooded with cheap critical minerals that undermine domestic manufacturers.

Under the proposal, the US would establish reference prices at each stage of mineral production.

For members of the preferential zone, these prices would function as floors, enforced through adjustable tariffs designed to preserve pricing integrity.

Washington has also moved to strengthen its own stockpiles.

Earlier this week, US President Donald Trump announced the creation of a strategic reserve for critical minerals known as Project Vault, backed by $10 billion in seed funding from the US Export-Import Bank and an additional $2 billion in private investment.

Recent Chinese export controls on rare earths have disrupted auto production in Europe and the US, while an oversupply of Chinese lithium has stalled expansion plans for American producers.

These developments have heightened concerns among the US and its partners, who have struggled to establish durable domestic mining and processing alternatives for lithium, nickel, rare earths and other strategic materials.