Japan is seeking to unite the G7 countries in a united front against China’s export controls on critical minerals, pushing for a base price mechanism to support the rare earth production economy within the alliance.
Speaking at the G7 Evian summit in France on June 16, Prime Minister Sanae Takaichi warned that China’s measures against Japan risked disrupting partner countries’ supply chains and called on G7 members and multilateral development banks to build more resilient mineral supply chains.
Takaichi expressed grave concern that China’s measures against Japan could disrupt the supply chains of G7 members and other like-minded countries, and stressed the need to work with international organizations to strengthen the resilience of critical mineral supply chains. She also underlined the importance of channeling support to developing mineral-producing countries through multilateral development banks (MDBs).
She added that Japan and G7 partners will further promote the World Bank Group’s Partnership for Supply Chain Growth (RISE) and cooperate with the Asian Development Bank (ADB) and the Inter-American Development Bank (IDB).
G7 leaders agreed to coordinate the gathering of critical minerals and reduce dependence on any single dominant supplier outside the G7. They also agreed to launch a new coordination platform with an expanded role for the International Energy Agency (IEA) to monitor markets and identify supply risks.
The target is to reduce dependence on any single non-G7 supplier of rare earths and permanent magnets to below 60% by 2030, with lithium and nickel designated as the two pilot metals for the initial build-up efforts.
The current impasse has escalated steadily since January this year, when China banned exports of all dual-use items to Japanese military users, citing Japan’s remilitarization efforts. The restrictions were prompted in part by Takaichi’s remarks that any use of force against Taiwan could constitute a survival-threatening situation for Japan, a legal threshold that could activate the country’s Self-Defense Forces. Chinese firms have since stopped supplying critical metals to Japanese companies for dual-use purposes, forcing them to pay a premium for sourced materials elsewhere.
The tactic echoed a move Beijing made 16 years ago. In 2010, China banned exports of rare earths to Japan after a collision between a Chinese trawler and Japanese coast guard vessels near the disputed Senkaku Islands.
At the time, Japan imported about 28,000 metric tons of rare earths annually, roughly 90% of which came from China, leaving its automotive and electronics sectors heavily exposed. Japan and its Western partners filed a complaint with the World Trade Organization (WTO), which ruled against China’s export controls in August 2014.
Japan responded to the 2010 blow by investing in overseas alternatives, including a $250 million stake in Australia’s Lynas Rare Earths, which mines ore at Mt Weld in Western Australia and refines it at a plant in Malaysia before sending processed materials to Japan.
But since 2012, China has flooded the market with cheap supply, making most foreign rare earth projects uneconomic. Molycorp, which owned the Mountain Pass rare earth mine in California, filed for bankruptcy in 2015. Although Japan and its Western partners won a WTO ruling against China’s export controls in August 2014, the damage was already done.
By 2020, Japan had cut China’s share of its rare earth imports to only about 60%, leaving Beijing’s power largely intact.
This time, the G7 action plan announced in Évian marks a significant departure from that previous era of unilateral responses. Unlike 2010, when Japan fought alone, the Évian framework includes a much broader coalition in support of mandatory supply objectives and coordinated collection.
Nikkei reported On June 10, Shin-Etsu Chemical, one of Japan’s largest producers of rare-earth magnets, plans to build a new domestic refinery in Fukui Prefecture at a cost of more than 35 billion yen (US$218 million), with roughly half of the funding coming from government subsidies.
A company spokesman said the refinery would help Shin-Etsu secure a steady supply of rare-earth products and magnets, but declined to provide further details on the plan.
Cold water from Beijing
China officially sticks to its guns. “In accordance with laws and regulations, China has banned the export of all dual-use items to Japanese military users and for Japan’s military use,” Foreign Ministry spokesman Lin Jian. said at a regular press conference on Thursday. “The goal is to deter Japan’s remilitarization and its pursuit of nuclear weapons. China’s position on keeping the global industrial and supply chain of critical minerals safe and stable has not changed.”
“In recent years, Japan has a habit of forming exclusive factions against China within the G7 and on other occasions,” Lim said. “Her G7 leader’s recent remarks on China were particularly damning, exposing that her attempt to rally allies and foment confrontation is not gaining traction and will fail.”
Lim said that if the Japanese side really wants to improve its relations with China, it should respect the four political documents between China and Japan, also respect its own commitments and take concrete actions to uphold the political foundations of China-Japan relations, instead of continuing to do things that make dialogue impossible.
As Japan actively pushes for its rare earth supply chain, Chinese experts throw cold water on its prospects for success.
“After China cut off supplies of rare earths to entities linked to the Japanese military in January, domestic prices in Japan tripled.” says a columnist based in Hefei who writes under the pen name “Sea Lion”. “Japan is now partnering with Canada’s Aclara Resources, which has mining projects in Brazil and Chile and has promised production by 2028, but this project is doomed to fail.”
He offers four reasons:
- Chronic lack of capacity. Even at full production, Aclara’s output would only amount to 15% of China’s annual output in 2024, not enough to cover US demand for electric vehicles alone, let alone supply Japan.
- Heavy rare earths remain the fatal weakness. Japan needs dysprosium and terbium for military and high-end production, and China controls almost all of the sustainable global supply. Aclara’s Brazil test line produces only 150 kilograms of heavy rare earths per year, insufficient for even a single Toyota production line.
- The timeline is unrealistic. Taking a mine from approval to production takes five to eight years. Delivery within two years is widely seen as impossible.
- The cost structure is prohibitive. With $400 million sunk into construction and untested equipment and technology built from scratch, the final product could cost more than double the price of the equivalent Chinese supply.
In fact, Japan is not relying on any single bet. Its firms and state-backed institutions have quietly blocked overseas supply on many fronts:
- Last November, JX Advanced Metals Corporation took a stake in RZ Resources, an Australian miner developing the Copi Project in New South Wales, which produces mineral sands, including rutile, zircon and monazite, used in aerospace and defence. Marubeni Corp followed with a further investment of A$15 million (US$9.4 million), giving Japan two anchor positions in the project.
- On March 9, the Japan Organization for Metals and Energy Security (JOGMEC), which aims to ensure sustainable supplies of resources and energy for Japan, signed a memorandum of understanding (MOU) with the state government of Goia, Brazil, on cooperation on rare earths. Brazil has about 21 million metric tons of rare earth reserves, second only to China, and a major mine in Goias began commercial production in 2024. In February, the US government announced an investment of more than US$500 million in the country, cementing Brazil as a key frontier for the US-Japan alliance.
- On March 10, Lynas Rare Earths update the supply agreement with Japan Australia Rare Earths (JARE), a joint venture between JOGMEC and Sojitz Corp of Japan, extending annual shipments of 7,200 metric tons of neodymium and praseodymium until 2038 at a price of US$110 per kilogram for 5,000 metric tons. The two sides also agreed to a steady supply of dysprosium and terbium.
What Tokyo is now pushing the G7 to adopt is a guaranteed floor price system for critical mineral contracts, with each mineral maintaining its agreed minimum price.
Under such a mechanism, G7 members would commit to buying rare earths at or above the base price for each material, ensuring that allied miners and refiners can recoup their costs, no matter how aggressively China undercuts the market. The US$110 per kilogram floor agreed in the Lynas-JARE deal is seen as a benchmark for neodymium and praseodymium within any broader G7 framework.
Benjamin Lin, director of the economic division at the Taipei Economic and Cultural Representation Office (TECO) in Japan, said that as the US and Japan move toward consensus on mineral-specific price levels, such guarantees could become a standard feature of international critical mineral contracts, serving as a direct counter to China’s ability to use non-market prices as a geopolitical tool.
For long-term security of supply, Japan is preparing to send a delegation in Greenland this summer to evaluate opportunities for rare earth mining, the Nikkei reported. Tokyo is also looking under the ocean floor, announcing this month, a deep-sea Pacific mission retrieved rare earthy sediments from a record depth of 6,000 meters.
A columnist based in Tianjin says It is unlikely that Japan will be able to bring rare earths to the deep sea on a commercial scale within a decade. But he admits that if Tokyo ultimately succeeds, pricing power over critical minerals, long concentrated in China, could gradually shift to a more dispersed global market.
Read: China plays a rare card in Japan, but keeps it subtle
Follow Jeff Pao at X at @jeffpao3
