2 days ago
Japan's plan to break China's rare-earth stranglehold
In the evolving landscape of critical mineral geopolitics, Japan is working to recalibrate its rare-earth strategy amid intensifying competition between the United States and China.
While Tokyo has aligned itself with partners such as the US, Australia and India to reduce reliance on Chinese rare earths, analysts caution that Beijing continues to dominate the supply chain, particularly in refining of rare-earth elements (REEs), where it holds over 90% of global capacity.
Japan's vulnerability was underscored following the 2010 export embargo by China, which catalyzed efforts to diversify sourcing. Recent trade data shows that Japan has significantly increased rare-earth imports from India and Southeast Asia, yet concerns persist about long-term supply security, as India aims to conserve its current rare-earth reserves.
At the same time, geopolitical developments, such as new US interest in Myanmar's rare-earth reserves and Quad-backed supply chain initiatives, highlight the growing strategic salience of these materials.
As the global push toward clean energy and advanced manufacturing accelerates, Japan's ability to secure a resilient and independent rare-earth supply chain remains a critical test of its industrial policy and diplomatic leverage.
The 2010 rare earth embargo on Japan remains a pivotal turning point in China's deployment of resource nationalism, exposing the strategic utility and limits of using REEs as a tool of economic statecraft.
While Beijing denied any formal restrictions, the abrupt halt in exports following the Senkaku boat collision sent shockwaves through Japan's manufacturing sector, which depended on China for over half of its REE imports at the time.
According to an extensive paper published this year by Dr Florence W. Yang of National Chengchi University, this incident catalyzed a dual-track shift: Japan scrambled to diversify its rare-earth sources and innovate around REE alternatives, while China doubled down on asserting control over its domestic REE industry through production caps, export taxes and strict investment regulations.
The episode not only demonstrated the geopolitical risks of supply concentration but also revealed China's own internal challenges, most notably widespread smuggling and regulatory gaps that undermined its pricing power.
In response, Beijing has since moved to restructure its rare-earth sector, forming state-backed conglomerates and launching a long-term strategy to dominate both upstream extraction and downstream magnet manufacturing.
For Japan, the 2010 crisis served as a cautionary tale, reinforcing the urgency of building a self-reliant and geopolitically resilient rare-earth supply chain in the decade that followed.
This strategic vulnerability is compounded by the increasingly concentrated nature of global supply chains for rare-earth permanent magnets (REPMs), which underpin the very technologies central to Japan's clean energy ambitions.
According to a recent publication co-authored by economist Dr Thomas Porcher, neodymium-iron-boron (NdFeB) magnets, used in electric vehicles, offshore wind turbines and industrial motors, account for the vast majority of global REPM demand, with wind and EV applications alone making up over 20%.
Yet Japan remains deeply dependent on upstream inputs sourced from China, which maintains overwhelming control over every stage of the NdFeB supply chain: mining, separation, refining and magnet production.
In this study, using monthly Chinese export data from 2017 to 2024, the authors find that geopolitical tensions, particularly with the United States and Australia, have not curbed China's exports of REPMs but instead correlate with increased volumes.
The authors interpret this as a form of calibrated statecraft: rather than impose abrupt restrictions, Beijing appears to adjust export flows to maintain market dominance while diffusing diplomatic pressure.
For Japan, this behavior adds complexity to supply chain diversification efforts, revealing that even 'reliable' flows from China may be strategically managed and subject to political calculus.
In response to the strategic opacity of China's rare-earth supply ecosystem, Tokyo has recently doubled down on innovative pathways to reduce its dependency. One such avenue is a novel partnership being explored with the European Union.
Under a newly proposed Japan‑EU 'economic two‑plus‑two' dialogue, the sides plan to launch joint public–private procurement of rare earth elements, effectively creating a collaborative sourcing channel designed to bypass Beijing's dominant market position.
At the same time, Tokyo has kicked off a domestic, frontier-oriented initiative. Starting in early 2026, Japan will begin test-mining rare-earth-rich mud from the seabed near Minamitori Island.
The pilot, scheduled to transition to daily recovery of up to 350 metric tons by January 2027, represents the world's first attempt at harvesting deep-sea REE resources and underscores Japan's strategic push to develop homegrown sources, especially of neodymium and dysprosium, which are vital for EV magnets.
In light of its recurring exposure to rare earth coercion, Tokyo has become increasingly vocal in its diplomatic strategy. In July 2025, Japan's foreign minister publicly pressed Beijing to expedite export licensing and ensure reliable access to REEs and magnets, underscoring Tokyo's concerns over unpredictability in Chinese export decision-making.
This appeal follows a pattern of restraint observed in past diplomatic crises, such as China's 2010 export curbs, highlighting Japan's limited room to maneuver despite its dependency. At the same time, Tokyo has been fortifying its regional alliances: recent reporting confirms that Japan is seeking to align its rare-earth sourcing policies with the United States, exploring joint procurement mechanisms as part of broader trade talks on critical minerals.
In June 2025, Japan formally proposed strengthening cooperation with the United States on rare-earth supply, integrating this into broader trade talks over tariffs and offering technical support on processing and refining in allied or third-country facilities.
These moves signal that Japan is shifting from reactive mitigation toward a proactive approach, leveraging multilateral frameworks to institutionalize resilience and offset Beijing's strategic leverage.
Despite these diplomatic and industrial advances, Japan's rare earth strategy is not without friction. While analysts praise Japan as being 'more prepared than most' for future supply shocks, thanks to long-term stockpiling efforts, investment in overseas mining projects and a well-developed domestic magnet manufacturing industry, critical gaps remain, particularly in upstream extraction and refining.
Tokyo's ambitious plan to harvest rare earths from ultra-deep seabed mud at Minamitorishima illustrates both its resourcefulness and the dilemmas it faces. Environmental groups have raised strong objections to the project, warning that the ecological risks of deep-sea mining remain poorly understood and potentially irreversible.
Duncan Currie, an environmental lawyer for the High Seas Alliance of like-minded nations and green groups, stated that this type of rare-earth extraction will be a fatal risk to life on and near the sea floor.
According to a July 2025 report by Japan's Agency for Natural Resources and Energy, the upcoming test-mining operation will target sediment layers at depths of over 5,500 meters, taking roughly three weeks to complete.
The tension between ecological risk and geopolitical necessity underscores a deeper challenge facing Japan: how to secure critical minerals without compromising its environmental commitments or strategic autonomy.
Japan's rare-earth realignment encapsulates the broader dilemmas faced by middle powers navigating an era of intensifying geoeconomic competition. While Tokyo has made notable progress in diversifying its rare-earth supply chains, forging international partnerships and pioneering frontier technologies like seabed mining, the road ahead is still fraught with uncertainty.
China's continued dominance, backed by vertically integrated production, strategic export behavior and aggressive resource nationalism, presents both a structural constraint and a moving target. Meanwhile, Japan's efforts to reduce dependence must balance geopolitical urgency with environmental ethics, industrial feasibility and alliance coordination.
As the global race for critical minerals accelerates in tandem with the clean energy transition, Japan's evolving rare-earth strategy offers a microcosm of the 21st-century resource struggle – one in which economic security, environmental stewardship and geopolitical agency are no longer separate concerns but deeply intertwined imperatives.
Sayaka Ohshima holds an MBA and a B.S. in Accounting, and works as a U.S.-based accountant specializing in financial reporting and compliance. Her research explores the intersection of economic policy, trade strategy and global capital flows.
